VZCZCXRO8671
RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHNEH RUEHPW
DE RUEHNE #0008/01 0021158
ZNR UUUUU ZZH
R 021158Z JAN 09
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 4913
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 000008 
 
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 
 
E.O. 12958: N/A 
TAGS: ECON EAGR EAIR ECPS EFIN EINV EMIN ENRG EPET ETRD
BEXP, KIPR, KWMN, IN 
 
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF 
DECEMBER 29, 2008 TO JANUARY 2, 2009 
 
¶1. (U) Below is a compilation of economic highlights from Embassy 
New Delhi for the week of December 29, 2008 to January 2, 2009, 
including the following: 
 
-- Trade Figures Decline for Second Consecutive Month 
-- 3G Telecom Spectrum Auction Postponed 
-- Most Indian Carriers Cut Domestic Fares 
-- Parliament Approves LLP Bill 
-- Blackstone Buys Stake in Seed Firm 
-- Heavy Fog in Delhi Disrupts Flight and Train Schedules 
-- New 'Incredible India' Marketing Campaign 
 
 
 
Trade Figures Decline for Second Consecutive Month 
---------------------------- 
 
¶2. (U) Trade data released on January 1 shows a decline in exports 
as well as a slowdown in the growth of non-oil imports.  Exports 
contracted by 9.9 percent in November 2008, year over year, after 
declining by 12.1 percent in October.  Meanwhile, the growth rate 
for non-oil imports was 3.4 percent in November, the lowest figure 
so far for the year.  Previously, import growth for much of the year 
was solidly above 20 percent.  Combined with an October decline in 
India's industrial production of 0.4 percent - the first contraction 
since 1993 - slowing or declining trade growth is evidence of 
worsening prospects for the Indian economy, according to Professor 
Biswajit Dhar of the Indian Institute of Foreign Trade. 
 
 
3G Telecom Spectrum Auction Postponed 
---------------------------- 
 
¶3. (SBU) U.S. telecom firm AT&T's representative for India today 
confirmed media reports that India's Ministry of Information and 
Communications Technology (MCIT), Department of Telecom (DOT) has 
postponed the long-delayed auction of third generation (3G) telecom 
frequency spectrum, scheduled for January 16, 2009, until at least 
January 30 and probably later.  DOT officials had decided on the 
postponement reportedly at the request of Indian and foreign 
companies seeking more time and also due to the poor response of 
potential bidders among foreign operators, who are concerned about 
raising large cash sums in the currently challenging financial 
markets.  In addition, the Cabinet Committee on Economic Affairs 
(CCEA) has not yet decided on a proposed annual administrative 
charge to successful 3G spectrum bidders of 2 percent of the highest 
bid amount, which was recommended by the Telecom Regulatory 
Authority of India (TRAI), but rejected by DOT's Telecom Commission. 
 Moreover, the Ministry of Finance reportedly sent a letter to DOT 
recommending a doubling of the previously announced minimum bid 
price for India-wide coverage for 3G and Wimax spectrum to Indian 
rupees (INR) 40.4 billion (about USD 800 million) and INR 20.2 
billion (USD 400 million), respectively.  Such an increase would 
further dampen foreign interest and delay the auction, the AT&T 
representative said. 
 
 
Most Indian Carriers Cut Domestic Fares 
------------------------- 
 
¶4. (U) After weeks of mounting pressure from the government and 
industry groups to cut air fares following a drop in aviation 
turbine fuel (ATF) prices, some of the major Indian carriers 
announced lower fares this past Tuesday.  State-owned carrier Air 
India announced major reductions, including cutting basic fares 
(price before taxes) by 35 to 82 percent on domestic sectors.  Jet 
Airways and its subsidiary JetLite also announced lower basic fares 
on all domestic flights.  According to a statement by the airline, 
their fares will now be 40 percent lower.  Another industry leader, 
Kingfisher Arlines, pledged to cut fares from January 1 onwards but 
as of today, has not made an official announcement. 
 
¶5. (U) Despite the October 2008 announcement of the Jet-Kingfisher 
 
NEW DELHI 00000008  002 OF 003 
 
 
alliance, media sources indicate there were some internal 
disagreements and miscalculations as to why both carriers did not 
announce fare cuts together.  Last week, Kingfisher Chairman Vijay 
Mallya said that it may cut fares if ATF becomes a "declared good," 
which would bring down sales tax to a uniform level of 4 percent, 
compared with the current rate of 4 to 26 percent in different 
states.  Also, budget airlines like SpiceJet and IndiGo have also 
reduced fares by 8 to 10 percent, with the former announcing schemes 
like INR 99 (about USD 2) on base fares.  With the drop in ATF 
prices expected to help the loss-making airlines reduce their 
operating costs, these announcements of air fare cuts should help 
the airlines increase passenger demand. 
 
 
Parliament Approves LLP Bill 
---------------------------- 
 
¶6. (U) The Indian Parliament on December 13, 2008 passed the pending 
Limited Liability Partnership (LLPs) Bill, 2008, which will now 
enable establishment of a LLP - a business model providing the 
benefits of corporate limited liability but allowing the flexibility 
of organizing the internal management along the lines of a 
partnership firm.  Corporate Affairs Minister Gupta has stated that 
this format would be quite useful for small and medium enterprises 
in general and for the enterprises in professional services sector, 
such as legal and accounting services.  His Ministry aims to 
implement the legislation by April 1, 2009. 
 
 
Blackstone Buys Stake in Seed Firm 
---------------------------- 
 
¶7. (U) U.S. private equity firm Blackstone has bought a stake in 
privately-held NSL Seeds, which claims to be the largest hybrid seed 
company in India.  According to unnamed media sources, Blackstone 
invested Rupees 250-300 crores (USD 50-60 million) for a 20-25 
percent stake in NSL in a private transaction.  NSL has a market 
presence in the field crops such as corn, cotton, rice, sunflower, 
sorghum, millet, and vegtables.  It has a strong distribution 
network of 25 warehouses, 1000 distributors, 20,000 sub-dealers, and 
a 350-person sales and marketing team.  In a press release, NSL 
group chairman Prabhakar Rao stated, "With their track record in 
adding value, their global reach and proactive approach, 
Blackstone's involvement will be very valuable in our journey from a 
privately-held company to a publicly-listed worldclass bio-agri 
frachise." 
 
 
Heavy Fog in Delhi Disrupts Flight and Train Schedules 
-------------------------- 
 
¶8. (U) Many north India cities, including Delhi, faced heavy 
seasonal fog which resulted in many flight delays and diversions, 
delayed train travel, and longer commutes in and around the capital. 
 The heavy winter fog is an annual phenomenon in Delhi in the winter 
months.  New Delhi's airport, equipped with a new runway with visual 
range (RVR) machines, had high expectations of ending fog-related 
delays.  However, according to media reporting, this technology was 
not utilized this week due to poor visibility which hampered exact 
readings by the machine as well as mechanical failures.  Flight 
operations were heavily impacted most of this week with some being 
canceled, most being delayed in the morning and late evening hours, 
and others being diverted to Mumbai or other airports.  Also, many 
trains to and from railway stations in Delhi were running several 
hours behind schedule due to the heavy fog. 
 
 
New 'Incredible India' Marketing Campaign 
----------------------------- 
 
¶9. (U) In the aftermath of the Mumbai attacks, the Tourism Ministry 
is planning to launch a new "Incredible India" campaign on January 
¶7.  This new marketing campaign will focus on a "resolute" India 
 
NEW DELHI 00000008  003 OF 003 
 
 
whose spirit remains unbroken.  The GOI plans to launch print and 
television commercials focusing on teamwork and unity while 
promoting various destinations throughout India.  A ministry 
spokesperson told reporters that, "Our campaign is using catch 
phrases like the global meltdown to turn it into an India-centric 
campaign. The aim is that the campaign should strike a note with 
people."  In one ad, a visual of a tiger carries a quote by Mahatma 
Gandhi: "I want all the cultures of all lands to be blown about my 
house as freely as possible. But I refuse to be blown off my feet by 
any."   With the travel and tourism industry severely hit by the 
global meltdown and the Mumbai attacks, the Ministry is determined 
to woo back foreign visitors to India.  The campaign will launch in 
major tourist markets like Europe, the US, Canada, Russia, Central 
Asia, Japan, China, Koreas, Scandinavia, Australia, and New Zealand. 
 
 
¶10. (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi 
 
¶11. (U) This is the first weekly ECON Office highlights for 2009. 
Happy New Year! 
 
MULFORD