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RR RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHNEH RUEHPW
DE RUEHNE #0532/01 0791301
ZNR UUUUU ZZH
R 201301Z MAR 09
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 5834
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 000532 
 
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 
MARCH 16 TO MARCH 20, 2009 
 
¶1. (U) Below is a compilation of economic highlights from Embassy 
New Delhi for the week of March 16-20, 2009, including the 
following: 
 
-- Inflation Falls to a Historic Low 
-- Foreign Direct Investments High Through January 
-- India Discusses Free Trade Pact with Chile 
-- New Pension Scheme for Informal Sector 
Deferred By Two Months 
-- Indian Shrimp Exporters Hope to Benefits from Reduced 
Anti-dumping Duties 
-- D.K. Mittal Takes Over as Additional Secretary (WTO) 
-- US Pharma Bill Would Open Market for Indian Generics 
-- Tata Seeks Patents for Nano Car Inventions 
-- Turkey and Egypt Slap Additional Import Duty On Indian Textile 
Yarn 
 
 
Inflation Falls to a Historic Low 
------------------------------- 
 
¶2. (SBU) India's wholesale price index (WPI) inflation year on year 
for the week ending March 7, 2009 fell to a record low of 0.44 
percent (the lowest since 1977).  While the fuel index remains in 
negative territory (-5.95%), prices of primary products were up 
4.38%.  Manufactured products decelerated sharply to 1.32%, a result 
of contraction in metal prices.  Much of the current fall in 
inflation is due more to last year's high base effect in many 
commodities than any great decline in real consumer prices.  Retail 
food prices continue to be high, with food grains prices about 9 
percent more expensive than a year ago.  Economists expect WPI 
inflation to turn negative for a few months, which might prompt 
consumers to delay spending in hopes of further price reductions, 
causing demand to fall.  However, Montek Singh Ahluwalia, Deputy 
Chairman of the Planning Commission, speaking to reporters on March 
19, predicted that the inflation rate would rebound from its present 
level, as there is still demand in the economy, which is expected to 
rise further in the second half of the year.  He further suggested 
that India's low inflation will enable policy makers to take more 
steps to stimulate a slowing economy, which many took to mean 
further reductions in interest rates. 
 
Foreign Direct Investments High Through January 
------------------------------------------ 
¶3. (U) India's foreign direct investment (FDI) inflows into India 
grew 58 percent to $2.7 billion in January 2009 (after registering 
an average rise of just $1.32 billion for three consecutive months) 
compared to $1.76 billion in the same month a year ago.  Cumulative 
FDI inflows for April-January 2009 totaled $23.8 billion and are 
expected to at least reach $25 billion for this fiscal year ending 
March, although the government's target of $35 billion set last year 
may not be met.  Ajay Shankar, Secretary of the Department of 
Industrial Policy and Promotion, was quoted to have said that 
"January numbers are very good... It is an indication of the 
confidence that the rest of the world has in India."  However, 
economists note that the increase in January could be from 
commitments made before the global financial crisis. 
 
India Discusses Free Trade Pact with Chile 
------------------------------------------ 
 
¶4. (U) During a recent meeting in New Delhi, Chilean President 
Michelle Bachelet and Prime Minister Manmohan Singh decided to 
deepen bilateral ties by exploring the possibility of a bilateral 
free trade agreement (FTA), initiated steps to expand defense 
cooperation, and intensified scientific ties, especially with 
respect to Antarctica.  India and Chile already have a functional 
Preferential Trade Agreement (PTA), with current bilateral trade at 
more than $2.3 billion.  Both countries have decided to strengthen 
cooperation in information technology and biotechnology.  Aiming to 
double trade in five years and to enhance defense cooperation, Chile 
also announced the opening of a commercial office and defense 
attache's office at its embassy in New Delhi.  During President 
 
NEW DELHI 00000532  002 OF 003 
 
 
Bachelet's visit, Chile and India also signed documents in the areas 
of new and renewable energy, education, exploration and utilization 
of outer space for peaceful purposes and geology and mineral 
resources. 
 
New Pension Scheme for Informal Sector 
Deferred By Two Months 
--------------------------------------- 
 
¶5.  (U) The Pension Funds Regulatory and Development Authority 
(PFRDA) has deferred launching the introduction of the New Pension 
System (NPS) for informal and privates sector workers by at least 
two months, because of the upcoming elections.  Introduction of the 
scheme for informal sector workers, which will allow partial 
investment of pension funds in equities, was initially set to be 
rolled out on April 1, 2009.  The PFRDA has already short-listed the 
six fund managers and 23 points of presence to collect the 
contributions from the investors, though contracts had not been 
signed.  The regulator had also started an advertising campaign in 
the last week of February to seek workers participation, which is 
reported to have generated a lot of interest.  However, in order not 
to violate the moral code of conduct for elections, scheduled to be 
held in April-May, the PFRDA decided not to continue the information 
campaign and undertake the participatory activities as originally 
planned. 
 
Indian Shrimp Exporters Hope to Benefit 
from Reduced Anti-dumping Duties 
------------------ 
 
¶6. (U) Pursuant to the U.S. decision to reduce antidumping duties on 
Indian shrimp, domestic industry reportedly hopes to become 
competitive in the U.S. market once again.  According to the Indian 
seafood industry, shrimp exports to the U.S. have declined in recent 
years due to several reasons, namely, the decline (until recently) 
of the dollar against major global currencies, slower growth of the 
U.S. economy, anti-dumping tariff disputes, and a reduction in 
consumer confidence.  The Kochi-based Seafood Exporters Association 
of India (SEAI) expects a further cut in the dumping duty on Indian 
shrimp in July 2009 with a final U.S. review. 
 
D.K. Mittal Takes Over as Additional Secretary (WTO) 
---------------------------------------- 
 
¶7. (U) D.K. Mittal was recently named an Additional Secretary for 
the Ministry of Commerce and Industry, in the post held previously 
by Rahul Khullar.  As the top bureaucrat of the Trade Policy 
Division in the Ministry, he will be responsible for WTO 
negotiations, reporting directly to Commerce Secretary GK Pillai. 
Mittal is known to be an approachable, results-oriented, and dynamic 
personality.  He is an IAS Officer of the 1977 batch from the state 
of Uttar Pradesh.  He previously served as Joint Secretary 
(Americas) in Commerce from 1998-2004, a post currently occupied by 
Anil Mukim.  In addition to his assignments at the Center, he has 
held key positions in his cadre state of Uttar Pradesh.  He was the 
CEO of Infrastructure Leasing and Financial Services (IL&FS) and 
Secretary to the Chief Minister of Uttar Pradesh.  He is also a 
postgraduate in Physics. 
 
US Pharma Bill Would Open Market for Indian Generics 
--------------------------------------------- -------- 
 
¶8. (U) Local media reported this week on the possible impact on the 
Indian generic drug industry of a pharma bill introduced in the U.S. 
Congress.  The bill, introduced by Senator Herbert Kohl (Wisconsin), 
aims to make it easier for generics to gain access to the U.S. 
market.  The bill would ban MNC pharma companies from transferring 
authorized generics to third parties, allowing cheaper generics to 
enter the market.  Most Indian generic exporters, such as Sun Pharma 
and Cipla, would likely benefit from the bill; however, Indian 
companies selling authorized generics would take a hit, including Dr 
Reddy, which recently introduced a generic migraine treatment in the 
U.S. that significantly increased its North American sales. 
 
NEW DELHI 00000532  003 OF 003 
 
 
 
Tata Seeks Patents for Nano Car Inventions 
------------------------------------------- 
 
¶9. (U) Tata Motors has applied for 37 patents to protect inventions 
and innovations related to the development of the Nano, the 
high-profile low-cost vehicle that will be launched on March 23. 
The company has also begun filing patent applications overseas, in 
line with its hopes to launch the Nano globally in 2011 in Eastern 
Europe, Latin America, Africa and South East Asia.  Several other 
auto-manufacturers have announced plans to develop low-cost vehicles 
and Tata is concerned that the inventions associated with making the 
car low-cost and fuel efficient, including specialized components 
and the rear-engine design, may be copied.  According to local 
media, Tata Motors is already close to filing Intellectual Property 
claims in international markets. 
 
Turkey and Egypt Slap Additional Import Duty on Indian Textile Yarn 
--------------------------------------------- -- 
 
¶10. (SBU) Econoff met Commerce Ministry Director Mukesh Bhatngar who 
confirmed that India has initiated a request for consultations with 
Turkey on the imposition of safeguard duties on the import of Indian 
cotton yarn.  The Indian textile industry has viewed the measure as 
a protectionist one and demanded the government to seek arbitration 
at the WTO dispute settlement body.  It is not clear at this moment 
whether India will challenge the move in the WTO; Bhatnagar informed 
Embassy officials that the ministry has not yet received an official 
notification from the Turkish government, and that his department is 
still collecting information from the industry to assess the 
compatibility of the safeguard duty to the WTO norms.  In the 
meantime, the Government of India (GOI) has requested consultations 
with the Turkish government and they are expected to take place some 
time in April 2009.  According to media reports and industry 
statements, the effective import duty on natural yarn in Turkey 
ranges between 15 and 20 per cent, against its 5-percent bound 
rate. 
 
¶11. (SBU) Egypt has also imposed a safeguard duty of 25 per cent on 
natural yarn recently against its bound duty rate of 15 per cent. 
Bhatnagar stated that Egypt has termed the additional duty as an 
"import fee" and the GOI is seeking more information from the 
Egyptian authorities on details of the levy, before asking for 
bilateral consultations.  The ministry has also started an 
investigation into the additional duty imposed by Egypt on the 
product. 
 
¶12. (SBU) Turkey and Egypt are among India's major textile export 
destinations with sales worth about $300 million; due to the recent 
protectionist measures, the industry expects a drastic drop in 
exports to both countries.  Motivated by cotton yarn exporters' 
demand to take up the issue at the dispute settlement body under the 
WTO, the GOI is prepared to challenge the move if investigations 
point to violation of WTO norms and the issue is not resolved 
through bilateral consultations. 
 
¶13. (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi. 
 
WHITE