VZCZCXRO6138
RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #2393/01 2491107
ZNR UUUUU ZZH
R 051107Z SEP 08
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 3269
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
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 03 NEW DELHI 002393 
 
SIPDIS 
SENSITIVE 
 
STATE FOR SCA/INS AND EEB 
USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD 
DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR 
DEPT PASS TO USTR CLILIENFELD/AADLER/CHINCKLEY 
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA MNUGENT 
TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN 
USDA pass FAS/OCRA/Radler/Bean/Carver/Riker 
EEB/CIP DAS GROSS, FSAEED, MSELINGER 
DEPT PASS TO USTDA HSTEINGASS/JNAGY 
 
E.O. 12958: N/A 
TAGS: EAGR EAIR ECON ECPS EFIN EINV ENRG EPET ETRD BEXP
KIPR, KWMN, PHUM, SENV, IN 
 
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF 
SEPTEMBER 1 TO SEPTEMBER 5, 2008 
 
¶1. (U) Below is a compilation of economic highlights from Embassy 
New Delhi for the week of September 1 to September 5, 2008, 
including the following: 
 
-- NEW ROUND OF EU/INDIA FTA TALKS 
-- U.S.-INDIA COOPERATION IN THE ENERGY SECTOR CONTINUES 
-- INVESTMENTS CONTINUE TO POUR INTO TAMIL NADU 
-- INDIA'S SPACE AGENCY EARNS USD 20 MILLION 
-- INDIA'S GDP GROWTH MODERATES TO 7.9 PERCENT 
-- UPDATE ON TRADE DATA 
 
NEW ROUND OF EU/INDIA FTA TALKS 
-------------------------------- 
 
¶2. (SBU) European Trade Commission Bermejo da Costa updated Econ 
Counselor on the upcoming round of EU-Indian FTA negotiations that 
will take place in Brussels the week of September 8.  While far from 
reaching a final deal, both sides have exchanged "negative lists" of 
the proposed ten percent of special products whose tariffs will not 
be cut.  On the list of goods that India will protect included wines 
and spirits and auto parts.  The GOI had still not transmitted their 
proposed schedule to reduce tariffs for the ninety percent of goods 
which must be zeroed out within a maximum of seven years from when 
the FTA goes into effect.  Da Costa also indicated that negotiators 
are meeting in Delhi September 4 and 5 to discuss services, where 
progress thus far has been slow. 
 
U.S.-INDIA COOPERATION IN THE ENERGY SECTOR CONTINUES 
---------------------- 
 
¶3. (U) As part of its ongoing commitment to the U.S.-India Energy 
Dialogue, the United States Trade and Development Agency (USTDA) has 
awarded a grant to the Bharat Petroleum Corporation Limited (BPCL) 
for technical assistance related to an asset integrity management 
program. BPCL is a large Indian public sector company with its core 
business in refining crude oil and marketing petroleum products. The 
grant will be used to introduce the company to a wide range of 
advanced safety technologies and inspection methodologies to 
minimize the risks and vulnerabilities of BPCL's petroleum refinery 
and pipeline operations. 
 
¶4. The $370,000 USTDA grant conferred on BPCL by the U.S. Consul 
General in Mumbai on August 29, 2008 will fund an examination of 
BPCL's refinery in Mumbai and training for BPCL personnel on a 
comprehensive strategy for evaluating risk to petroleum refineries 
and related facilities. The technical assistance program will also 
demonstrate a wide range of advanced technologies available from 
U.S. firms. Successful implementation of the technical assistance 
program will result in immediate business opportunities of 
approximately $80 million in annual sales, for U.S. businesses that 
offer technologies and services for implementing asset integrity 
management programs, across the petroleum refining sector in India. 
 
 
INVESTMENTS CONTINUE TO POUR INTO TAMIL NADU 
-------------------------------------------- 
 
¶5. (U) The Tamil Nadu government cleared several projects this week 
that will bring significant foreign investment into the state's 
manufacturing sector.  This included French tire-maker Michelin's 
plans to build a USD 1 billion production facility just outside 
Chennai.  It also approved the plans of Delphi, a U.S.-based 
manufacturer of automotive parts and electronic components, to 
establish a manufacturing facility in the same area with an initial 
investment of USD 20 million.  The government expects these 
investments to create over 5000 jobs.  An executive from the new 
Renault-Nissan automobile plant (located in the same general area 
and due to begin operations in 2010) told us that he expects 
additional new investments in the region by component suppliers who 
will be providing parts for his plant. 
 
¶6. (U) While appreciative of the continued interest of foreign 
 
NEW DELHI 00002393  002 OF 003 
 
 
investors, Tamil Nadu's government is keen on enticing investors to 
locate facilities in other areas of the state, particularly in the 
state's southern districts.  The state's Secretary for Industry 
reportedly told journalists that the state government was in talks 
with central authorities on the possibility of turning highway 45 -- 
which connects Chennai with some of these southern districts -- into 
an eight-lane motorway. 
 
INDIA'S SPACE AGENCY EARNS USD 20 MILLION 
----------------------------------------- 
 
¶7. (SBU) The commercial arm of the Indian Space Research 
Organization (ISRO), Antrix, earned revenues of USD 20 million 
during the Indian fiscal year 2007-8, amounting to approximately two 
percent of ISRO's budget of USD 940 million.  Dr Jacob Ninan, the 
director of ISRO's Office of International Cooperation told 
Consulate Chennai that more than 75 percent of Antrix's revenues 
derived from satellite imagery services offered to customers from 
around the world.  He also said that the successful launches of 
Israeli and Italian satellites boosted Antrix's revenues.  He said 
that revenues from commercial launches should increase this fiscal 
year, as Antrix is planning to launch additional European 
satellites. 
 
INDIA'S GDP GROWTH MODERATES TO 7.9 PERCENT 
----------------------------------------- 
 
¶8. (U) The government released data last week indicating that 
India's GDP growth rate moderated to 7.9 percent in the first 
quarter (April-June) of FY 2008-09 from 8.8 percent growth in 
January-March 2008 and 9.2 percent in April-June of FY 2007-08. The 
lower growth is largely due to the slowdown in the manufacturing 
sector to 5.6 percent growth during April-June 2008, compared to 
10.9 percent recorded during the same period last year. The tight 
monetary policy to rein in inflation has led to subdued demand 
conditions, especially in interest sensitive sectors such as auto, 
consumer durables and real estate.  However, the investment/GDP 
ratio remained healthy at 32.2 percent. The farm sector grew by 3 
percent versus 4.4 percent in the corresponding period of last year. 
Meanwhile, the services sector continued to remain buoyant at 10 
percent, driven mainly by the trade, hotels, communication and 
transport sector.  That sector rose by 11.2 percent, while 
construction activity was also robust at 11.4 percent. Finance 
Minister Chidambaram stated that he expects GDP growth to remain 
around 8 percent for FY 2008-09, although most analysts now expect 
GDP growth in the 7.5-8% range. However, the fiscal stimulus of 
lower income tax rates, farm loan waivers and the pay commission 
award could keep consumption demand high. 
 
UPDATE ON TRADE DATA 
------------------- 
 
¶9. (U) The latest government trade data shows that export growth in 
dollar terms has picked up and grew by 31.2 percent in the month of 
July; in the period April-July 2008, exports grew 25 percent to 
reach $59.2 billion. This was primarily due to the depreciation of 
the rupee and partially due to exports of petroleum products, 
chemicals and engineering goods. Imports registered an even sharper 
rise of 48 percent for the month of July and 34 percent during 
April-July, crossing $100 billion.  This is largely due to the big 
rise in the cost of oil imports. Overall, the trade deficit widened 
to $41 billion during April-July 2008, already half of the $80 
billion for full FY 2007-08. 
 
¶10. (U) Reacting to the trade data, Ganesh Kumar Gupta, President of 
the Federation of Indian Export Organization, commented that the 
good export performance had occurred despite the inflationary 
pressures in India and the economic slowdown in Europe and US. 
However, traditional exports sectors like textiles and leather did 
not perform well and he opined that the recent duty drawback 
reduction has accentuated the blow. According to Commerce Secretary 
Pillai, exports to US and EU markets are now not as important as in 
 
NEW DELHI 00002393  003 OF 003 
 
 
the past. Exports have diversified to include Latin America, South 
East Asia and the ASEAN region. Moreover, the recent free trade 
agreement with the South-East Asian Nations (ASEAN) is likely to 
hasten the pace of export growth there as import duties will come 
down. Trade analysts opine that the export target of $200 billion 
set for the FY 2008-09 by the government seems achievable. 
 
¶11. (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi 
 
MULFORD