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R 051328Z JUN 09
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 6886
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
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UNCLAS SECTION 01 OF 07 NEW DELHI 001162 
 
SENSITIVE 
SIPDIS 
 
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/FERUS 
EEB/CIP DAS GROSS, FSAEED, MSELINGER 
 
E.O. 12958: N/A 
TAGS: ECON EAGR EAIR ECPS EFIN EINV EMIN ENRG EPET ETRD
BEXP, KBIO, KIPR, KWMN, IN 
 
SUBJECT: New Delhi Weekly Econ Office Highlights for the Week of 
June 1 to June 5, 2009 
 
¶1. (U) Below is a compilation of economic highlights from Embassy 
New Delhi for the week of June 1-5, 2009, including the following: 
 
-- GDP Growth of 6.7% Surprises on the Upside 
-- Infrastructure Sector Recovers Somewhat in April 
-- Some Signs of Expanding Manufacturing Sector 
-- FY 2009-10 Begins With Continued Sliding Exports 
-- Industry Expects Stimulus in Budget 2009-10 
-- Commerce Minister Discusses FDI; Previews Bali Talks 
-- Key Reforms in the Aviation Sector Looking Likely 
-- Policy Traction for Subsidy Reforms 
-- GM India Remains Mostly Insulated from U.S. Parent's Bankruptcy 
-- New Gas Find in Krishna Godavari Basin, Maybe 
-- Strategic Oil Reserve: Construction Begins 
-- Ministry of Corporate Affairs and Ministry of Minority Affairs - 
Salman Khursheed 
-- Ministry of Chemicals and Fertilizer - M.K. Azhagiri 
-- Ministry of Information and Broadcasting (MI&B)- Mrs. Ambika 
Soni 
 
GDP Growth of 6.7% Surprises on the Upside 
------------------------------------------- 
 
¶2.  (U) Government data released last week indicates that the Indian 
economy registered a better-than-expected 6.7 percent growth in FY 
2008-09 (versus 9 percent registered a year earlier) despite the 
global downturn.  The fourth quarter (January-March) growth figures 
of FY 2009-09 were also better than anticipated at 5.8 percent, due 
to higher government spending and robust performance of the services 
sector.  However, the farm sector grew by just 1.6 percent during FY 
2008-09, compared to 4.9 percent in the previous year.  The high 
base was reportedly a major factor contributing to slower growth in 
the agricultural sector. 
 
¶3.  (U) The industrial sector slowed to 3.9 percent during FY 
2008-09 compared with 8.1 percent growth in FY 2007-08.  This was 
largely due to the weak growth in the manufacturing sector.  Service 
sector growth for FY 2008-09 was more buoyant at 9.7 percent, driven 
mainly by trade, transport, hotels and communications which rose by 
9 percent, while community, social and personal services were 
robust at 13 percent, the latter a reflection of the disbursement of 
Pay Commission raises.  Finally, telecom sector growth remained 
steadfast, with the mobile subscriber base crossing the 400 million 
mark in April 2009.  The higher than expected growth figure 
following elections prompted several economists to boost their 
Indian growth forecasts for the coming fiscal year.  Citi raised its 
call from 5.5% to 6.8%, while Nomura Securities hiked its GDP 
forecast to 7%.  (Note: These figures are not necessarily the final 
call on FY 2009 performance.  GDP figures are frequently revised 
over time, as the government publishes four sets of estimates for 
each time period.  For example, the October-December GDP growth 
figure released in February was revised upwards last week from 5.3% 
to 5.8%. End note.) 
 
Infrastructure Sector Recovers Somewhat in April 
------------------------------------------ 
 
¶4.  (U) The infrastructure sector rebounded in April 2009, showing a 
4.3 percent increase (versus 2.3 percent in April 2008) - the most 
since July 2008 - on a better-than-expected performance in coal, 
electricity and cement.  Increased government spending in the 
infrastructure sector could be one of the key reasons for this 
increase.  Coal production grew at a healthy 13.2 percent in April, 
due to high output from new mines and additional demand for power as 
a result of rising industrial activity.  Cement output at 11.7 
percent in April was the highest since February 2007, also pointing 
towards increased activity in the infrastructure sector. 
Electricity production grew by a healthy 6 percent. Steel production 
also improved in April over the previous months.  However, 
production of crude oil and petroleum products dipped due to ageing 
oil wells, coupled with no new discovery of high-yielding oil fields 
in the country. 
 
 
NEW DELHI 00001162  002 OF 007 
 
 
¶5.  (U) The healthy core sector figures for April 2009 have raised 
hopes of recovering industrial production, as these infrastructure 
industries have a combined weight of 26.7 percent in the index of 
industrial production.  Economists expect that revival in steel and 
cement production on the back of higher public spending will 
continue after April.  Already, cement dispatches for the month of 
May from major cement manufacturers showed robust growth. Media 
reports that real estate sector in metros is seeing signs of revival 
in the first quarter of the FY 2009-10 as many  new commercial deals 
on lease rentals with many big companies including Aditya Birla 
Group, KPMG, Wipro and  Ernst and Young are getting ready to be 
signed. 
 
Some Signs of Expanding Manufacturing Sector 
------------------------------------------ 
¶6.  (U) The ABN Amro Purchasing Managers' Index (PMI) expanded for 
the second consecutive month in May.  The index, which uses 
responses from purchasing managers in 500 industrial companies, 
increased to 55.7 in May, compared with 55.3 in April.  A reading 
above 50 indicates expansion of that particular variable, while a 
reading below 50 indicates an overall decrease.  Manufacturers 
reported higher new orders because of revival in domestic demand. 
However, it will take some more time for the revival phase to set 
in, given the weakness in India's exports. 
¶7.  (U) Despite an increase in new orders at 59.6 in May, firms have 
been under competitive pressure that prevented them from increasing 
prices.  The output prices index stood at 49.3 in May this year. 
The employment index crossed the threshold 50-level mark for the 
first time in 2009 because of new orders, ending the retrenchment 
period.  Firms employed more staff in order to increase productive 
capacity as orders started increasing.  Purchasing activity and 
pre-production stocks rose sharply over the month, as firms expect 
higher production orders in the coming months.  However, new export 
orders index fell to 49.9 in May, from 50.7 in the April.  The 
survey reports that foreign demand for Indian manufacturers was 
broadly unchanged during the survey period. 
FY 2009-10 Begins With Continued Sliding Exports 
------------------------ 
 
¶8.  (U) According to the latest Ministry of Commerce and Industry 
(MOCI) estimate, Indian merchandise exports dropped 33 percent to 
$10.7 billion in April 2009 compared to April 2008, although in 
rupee terms the drop was 16%.  The downtrend in India's merchandise 
exports continued for the seventh month consecutively, indicating 
the enduring impact of the global slowdown.  Exports had nosedived 
33 percent in March 2009, the worst in 14 years.  India's total 
merchandise exports for fiscal 2008-09 (ending March 31, 2009) 
touched $168.7 billion, recording only 3.4 percent growth - falling 
short of the government's revised target of $175 billion.  Commerce 
Secretary G.K. Pillai has repeatedly said that current fiscal year, 
which began April 1, may witness a modest contraction in merchandise 
exports.  However, the Federation of Indian Export Organization 
(FIEO) expects 10 percent growth in India's exports in FY2009-10, to 
$185 billion, on the expectation of a recovery in demand from Europe 
in view of that region's depleting inventories. 
 
¶9.  (U) Preliminary data also shows that India's imports contracted 
during April 2009 for the fourth month in a row, registering a 37.5 
percent decrease compared with April 2008.  Government and industry 
attribute the deceleration in imports to weak domestic demand and 
price effects from lower crude oil prices.  In FY2008-09, India's 
total imports grew 14.3 percent to touch $287.7 billion. 
 
Industry Expects Stimulus in Budget 2009-10 
------------------------------------------- 
 
¶10.  (U) Commerce and Industry Minister Anand Sharma has told 
reporters that the FY 2009-10 Budget, slated to be presented in 
Parliament in the first week of July, is expected to include 
incentives for the manufacturing and export sectors.  The package 
may contain tax incentives, and special incentives for 
labor-intensive sectors such as textiles, gems & jewelry, and 
leather.  Sharma is keen to provide incentives to make Indian 
 
NEW DELHI 00001162  003 OF 007 
 
 
exports globally more attractive.  He recently met with export 
promotion councils to devise incentives for the export sector and 
announced that "negative export growth might persist for some more 
time but the Government would work to minimize the impact of [the] 
global slowdown".  Apart from seeking the abolition of the fringe 
benefit tax, service tax exemption, and concessional credit 
facilities, exporters also voiced concern about distorted prices of 
products all over the world due to huge stimulus programs extended 
by competitors such as China, Vietnam, Thailand, and Bangladesh. 
While some measures are expected to be rolled out in the Budget, 
others will be announced in the Foreign Trade Policy in August 
¶2009. 
 
Commerce Minister Discusses FDI; Previews Bali Talks 
------------------------------------------- 
 
¶11.  (U) Commenting on India's foreign direct investment (FDI) 
regime, Minister Sharma emphasized the importance of FDI in 
infrastructure and other value-addition sectors in agriculture.  He 
was quick to add that "the recently announced new FDI guidelines 
were decided by the empowered group of ministers on FDI after 
bringing in all points of views, and there is no question of a 
comprehensive review at the moment".  Commenting on the impact of 
the US' proposed changes in its tax policy on investments in India, 
the minister was hopeful that private equity investors and other 
funds may come back to India now with stability in the government 
and equity climate despite the proposed U.S. tax law changes. 
 
¶12.  (U) In a press interview, Sharma indicated that he would 
discuss the issue of protectionism with USTR Kirk in their upcoming 
meeting in Bali during the Cairns Group Ministerial, June 7-9. 
Sharma also told the press that both the leaders will deliberate 
upon the impact of the global downturn and possible ways to deal 
with it.  Commenting on the possibility of advancing WTO Doha Round 
talks, the Minister stated that he would like to discuss with the 
USTR the controversial issues that stalled WTO discussions last year 
and need to be sorted out for conclusion of the round. 
 
Key Reforms in the Aviation Sector Looking Likely 
--------------------------------------------- ---- 
 
¶13.  (U) With the UPA coming back to power with a clear mandate and 
Praful Patel resuming charge at the Ministry of Civil Aviation 
(MOCA), the GOI is likely to move forward with much needed reforms 
in the Indian aviation sector.  Foremost among these is the revived 
MOCA proposal to allow foreign carriers to invest in domestic 
airlines and thereby help the cash-strapped carriers.  At present, 
only non-aviation companies and financial investors, including 
private equity funds, can buy up to a 49% stake.  Facing rising debt 
and losses and falling demand, coupled with expensive fuel last year 
and overexpansion in the last few years, the Indian aviation 
industry has been adversely affected by the economic slowdown.  In 
addition to a direct cash infusion, allowing foreign airlines to 
take equity positions in domestic carriers is expected to encourage 
private equity players and hedge funds to invest more in the 
industry.  That said, while Kingfisher Airlines Chairman Vijay 
Mallya welcomed this possible move, Naresh Goyal of Jet Airways is 
opposed to it.  Also, some industry observers fear the reform may be 
coming too late, as foreign carriers have limited equity to invest 
in the midst of the global financial recession. 
 
¶14.  (U) Also, this week, Minister Patel announced plans to divest 
some of its stake in NACIL that operates Air India and Indian 
Airlines, through an IPO.  With a current debt of almost $3 billion 
and annual losses of $600 million, as well as depressed market 
conditions, a successful IPO of Air India seems a difficult 
proposition.   (Note:  Air India recently merged with government-run 
domestic carrier Indian Airlines to increase operational 
efficiencies, a move that has not resulted in increased passenger 
revenues as expected.  End note.)  However, Air India's expansion 
plans are still in place and the carrier will take delivery of 26 
new aircraft this year.  MOCA is also expected to announce its 
ambitious program for development and modernization of 35 non-metro 
 
NEW DELHI 00001162  004 OF 007 
 
 
airports.  Other key priorities will include improving airport 
infrastructure, tax rationalization across states for Aviation 
Turbine Fuel (ATF), and aviation safety. 
 
Policy Traction for Subsidy Reforms 
----------------------------------- 
¶15.  (SBU) Planning Commission Deputy Chairman Montek Singh 
Ahluwalia and Delhi Chief Minister Sheila Dikshit were the key 
speakers at a seminar on June 4 on the use of conditional cash 
transfers (CCT), such as school vouchers, as a form of social safety 
net.  Ahluwalia stated that India had traditionally focused more on 
anti-poverty development than social safety nets.  However, he 
observed, India's current and coming stages of economic 
transformation, where workers leave the agricultural sector for 
manufacturing and services, actually increased the need for safety 
nets.  This is because economic restructuring will had adverse 
impact in some places and some sections of society will be hit. 
Ahluwalia said that India had been transforming many of its 
anti-poverty schemes to safety nets over the last few years in an ad 
hoc fashion, pointing to NREG and the health insurance scheme for 
below poverty line (BPL) citizens as examples.  He ended by 
welcoming research on CCTs, since he noted wryly that it is hard to 
introduce a "new idea in India without close scrutiny."  (Note: 
Another Planning Commission official at the event said that 
Ahluwalia had tasked him to research the use of CCTs in India.  End 
note.) 
¶16.  (SBU) Ahluwalia was followed by Delhi Chief Minister Sheila 
Dikshit, who described her government's efforts to improve the 
delivery of existing subsidies to Delhi citizens.  She said that 
Delhi had nearly 50 different schemes for various social groups, 
where a great element of corruption has crept in, citing as examples 
the food and kerosene subsidies administered under the Public 
Distribution System.  As one step towards stemming corruption, 
Dikshit explained that her government has moved to excluse families 
whose annual incomes exceed Rs 100,000 (roughly $2000), because her 
government had found that most of those above that income threshold 
did not actually avail of the subsidy, leaving a vast amount that 
typically got "siphoned" off by contractors.  The Delhi government 
is also examining moving to a cash transfer and a single smart card. 
 Further, out of nearly 10 million Delhi residents eligible for 
government programs, only 4.5 million actually tap the benefits, due 
to a lack of awareness and difficulty navigating bureaucracies. 
That has led Delhi to start "mission convergence offices" to provide 
one-stop sites for poorer, often illiterate, residents to gain 
access to government benefits. 
GM India Remains Mostly Insulated from 
U.S. Parent's Bankruptcy 
------------------------- 
 
¶17.  (U) In the wake of the announcement of General Motor's 
bankruptcy in the US, GM India moved quickly to announce that it 
would not be affected by the parent company's filing and that it 
will not alter expansion plans or make any reductions in its labor 
force.  In a statement issued by GM India, Karl Slym, President and 
Managing Director, noted that the company's sales, services, spare 
parts and warranty coverage would go on uninterrupted.  According to 
local media, GM India is also circulating a video among dealers and 
suppliers featuring Slym, stating that Indian operations don't fall 
under the bankruptcy and that business would continue as usual.  The 
company also plans to launch a print media campaign to bolster 
consumer confidence in the company's brand.  Despite GM India's 
assurances, GM dealers are reportedly concerned about the negative 
impact on the company's overall image, noting that there has already 
been a noticeable drop in footfalls in their showrooms.  Auto 
component suppliers, on the other hand, were enthusiastic that the 
bankruptcy may present opportunities for increased sales as GM looks 
to cut costs and implement more effective sourcing. 
 
¶18.  (U) The Indian arm of the U.S. carmaker has invested $1.07 
billion in the past 14 years to expand its factory capacity in hopes 
of capitalizing on cheap labor and high sales growth potential 
provided by India's emerging middle class.  While sales of its five 
models in India have been low in comparison with its Indian 
 
NEW DELHI 00001162  005 OF 007 
 
 
competitors, the company has significantly increased its capacity 
with new plants going online in Gujarat and Maharasthra, reducing 
the company's reliance on foreign imports.  The company also plans 
to invest $200 million in the construction of an auto engine and 
transmission factory to be completed next year.  Today, GM India 
launched a new model of the Spark, its compact car, the first of 
five new models to be introduced in the next two years.  Two of the 
cars will be alternative fuel vehicles powered by compressed natural 
gas (CNG) and liquified petroleum gas (LPG).  (Comment: As GM 
reorganizes in the US, growth in sales due to expanded operations in 
India may even bolster the company in the long run, provided GM 
India can continue to manage its brand and provide competitive 
products to Indian consumers.  End comment.) 
 
New Gas Find in Krishna Godavari Basin, Maybe 
--------------------------------------------- 
 
¶19.  (SBU) Hardy Oil and Gas PLC, a British joint venture partner 
with Reliance Energy, announced on May 26 two major gas discoveries 
in blocks D3 and D9 in the Krishna Godavari basin, off the coast of 
Andhra Pradesh.  The company quoted estimates made by petroleum 
consultancy Gaffney, Cline and Associates that placed gas reserves 
at 9.5 trillion cubic feet (TCF) in D3 and 11 TCF in D9.  Oil 
reserves in the two blocks are estimated to be 143 million barrels. 
A senior official at the Gas Authority of India told Consulate 
General Chennai that these estimates appear to be fairly accurate, 
adding that this find, with proper exploitation, could make India 
one the top 20 producers of natural gas in the world.  The GOI's 
Director General of Hydrocarbons has yet to make its assessment of 
the two blocks, however, and has called Hardy's announcement 
"premature." 
 
Strategic Oil Reserve: Construction Begins 
------------------------------------------ 
 
¶20.  (SBU) Construction of underground crude oil storage tanks at 
two locations near Mangalore (350 km west of Bangalore, on 
Karnataka's coast) began on May 27.  The underground storage tanks 
will form part of a strategic oil reserve being built by the Indian 
government capable of holding fourteen days' supply of crude for the 
country.  Karnataka's Energy Secretary told Consulate General 
Chennai that the combined storage capacity of the project will be 
2.5 million tons, and that they should be operational in 2011.  He 
also told us that the site was chosen because of its proximity to 
Mangalore's refineries, which are India's largest producer of diesel 
fuel.  Construction of a similar storage facility at Vishakapatnam 
(on the northeastern coast of Andhra Pradesh) should begin later 
this year. 
 
Ministry of Corporate Affairs and 
Ministry of Minority Affairs - Salman Khursheed 
--------------------------------------------- -- 
 
¶21.  (SBU) On May 28, Salman Khursheed was appointed Minister of 
State in charge of the Ministry of Corporate Affairs (MCA) and the 
Ministry of Minority Affairs.  Viewed as a suave intellectual, 
Khursheed assumes charge of the Ministry of Corporate Affairs at a 
time when it is dealing with the Satyam scandal.  Since assuming 
charge, he has publicly stated the need to expedite the prosecution 
and close the probe of the Satyam scandal soon.  Khursheed promised 
to review powers given to the Serious Frauds Investigation Office 
(SFIO) and examine ways to strengthen it.  Also, on the issue of 
possible lay-offs, as many as 10,000, at Satyam by new owner Tech 
Mahindra Ltd, he said the government would intervene only if there 
was large-scale retrenchment.  "In such a situation, it's not only 
MCA but other ministries, such as the labor ministry, will be also 
involved." 
 
¶22.  (SBU) Khursheed has also stated that reintroducing the 
Companies Bill of 2008, which replaces the Companies Act of 1956, is 
a top priority.  The bill makes it easier to start and close firms 
and protects the interests of shareholders and investors; it also 
makes firms and their promoters more accountable and requires 
 
NEW DELHI 00001162  006 OF 007 
 
 
disclosure of subsidiaries.  While the basic structure of the bill 
is likely to remain intact, Khursheed may reintroduce the bill with 
some amendments, such as more power to auditors to ensure their 
independence in light of the Satyam scandal.  Khursheed has 
repeatedly emphasized that the ministry will stand for transparency 
and seek to protect the interests of retail investors.  He has also 
pledged to restructure the MCA and allied agencies like the SFIC and 
the Registrar of Companies (ROC) to increase their scope and 
efficiency.  The Ministry has also helped to establish the 
Competition Commission of India (CCI), which should act as an 
independent regulator but will continue to lean on the ministry for 
guidance.  As the CCI becomes fully operational as the anti-trust 
body for India overseeing merger and acquisition activity in India, 
Khursheed will play an important advisory role for this regulatory 
agency. 
 
¶23.  (U) Bio: Khursheed currently represents the Farukhabad Lok 
Sabha seat of Uttar Pradesh and is a member of the Congress Working 
Committee.  Prior to this, Khursheed headed the Congress Party's 
state unit in Uttar Pradesh and chaired the party's policy planning 
and coordination department at the national level.  In his later 
role, Khursheed was recognized for being one of the key architects 
of Congress' election campaign in the May 2004 Lok Sabha elections. 
In the early 1990s, he served as Minister of State for External 
Affairs in the Narasimha Rao government.  Under Prime Minister 
Indira Gandhi, he was an Officer on Special Duty in the Prime 
Minister's Office.  He is close to the Congress Party chief Sonia 
Gandhi, and son Rahul Gandhi. 
 
¶24.  (U) Described as suave, charismatic, gentle, and articulate, 
Khursheed is a lawyer by training and joined the Supreme Court Bar 
in 1977.  He has also taught law at Trinity College at Oxford 
University.  Known for his progressive, modern, and liberal outlook, 
Khursheed is an honorary chair of many of Delhi based educational 
institutions including Delhi Public School and cultural literary 
bodies.  Khursheed is very knowledgeable on Indo-Pak relations, 
India's policies with neighboring countries, and overall foreign 
policy objectives of India. 
 
Ministry of Chemicals and Fertilizer - M.K. Azhagiri 
------------------------------------ 
 
¶25.  (SBU) The Tamil Nadu-based DMK party, led by aging leader 
Karunanidhi, insisted upon several Cabinet positions for its MPs 
because of its pre-election alliance with Congress.  One of the more 
colorful DMK MPs to find a place in the UPA government is the new 
Minister of Chemicals and Fertilizers, M.K. Azhagiri.  Azhagiri has 
already signaled that his priorities are to "ensure the timely 
availability of...subsidized fertilizers to farmers" including 
through modernizing and restructuring factories and imports.  [Note: 
India is a large importer of diammonium phosphate (DAP) fertilizer 
from the U.S.  According to U.S. Commerce Department figures, Indian 
imports of DAP from the U.S. in 2008 totaled $2.78 billion, $778 
million in 2007, and $587 million in 2006.  End note.]  He also 
indicated that in relation to the pharmaceutical sector, "all types 
of medicines used by the common people will be provided throughout 
the country at an affordable price." 
 
¶26.  (SBU) On the day he was sworn in, Azhagiri pledged that the DMK 
would revive the Sethu Samudram project, which involves dredging the 
Palk Strait between India and Sri Lanka to allow ships to pass 
through the channel rather than taking a circuitous route around Sri 
Lanka, although the project is not in his purview.  The project - 
part of the DMK's election manifesto - was originally pursued in the 
previous UPA government by Union Minister of Shipping (and DMK 
official) T.R. Baalu, who has been replaced by a Congress party 
stalwart also from Tamil Nadu.  The project is opposed by some Hindu 
religious groups who claim it would damage the 'Ram Sethu' bridge, 
which was believed to have been built by Lord Rama so he could cross 
over to Sri Lanka. 
 
¶27.  (SBU) Bio: Muthuvel Karunanidhi Azhagiri (pronounced 
AH-yah-gee-ree), born January 30, 1950 (or 1945, according to some 
 
NEW DELHI 00001162  007 OF 007 
 
 
sources), is the second-oldest son of Tamil Nadu Chief Minister and 
DMK President M. Karunanidhi.  DMK insiders believe Karunanidhi's 
decision to send Azhagiri to Delhi, while naming Azhagiri's younger 
brother (M.K. Stalin) to the post of Deputy Chief Minister in Tamil 
Nadu, is part of a plan to divide up responsibilities between his 
two sons.  Azhagiri will look after the party affairs in New Delhi 
while Stalin is expected to become Karunanidhi's successor as Chief 
Minister.  Based in Madurai since 1989, Azhagiri controlled party 
affairs in Tamil Nadu's southern districts without holding any 
official position until 2009.  His father had sent him to settle 
down in Madurai due to the growing sibling rivalry between Azhagiri 
and Stalin.  In May 2003, Tamil Nadu police arrested Azhagiri for 
criminal conspiracy in a case relating to the murder of a senior DMK 
leader.  Azhagiri, along with 12 other co-accused, were acquitted in 
May 2008 for lack of evidence.  Azhagiri's rise in the DMK took 
place after his organizational skills helped the DMK-led alliance 
win three state assembly by-elections in 2006, 07 and 09.  The DMK 
won nine of the ten southern Tamil Nadu Lok Sabha seats up for grabs 
in the recent elections, thanks largely, say many observers, to the 
unrivalled pay-for-votes system engineered by Azhagiri.  His English 
is limited, but functional. 
 
Ministry of Information and Broadcasting (MI&B) 
- Mrs. Ambika Soni 
--------------------------------------------- -- 
 
¶28.  (U) Mrs. Ambika Soni (age 65), the new MI&B minister, served 
previously as Minister of Tourism and Culture from 2006-2009.  The 
Ministry of Information and Broadcasting has authority over licenses 
and approvals related to media, entertainment and broadcasting - 
areas of central interest to U.S. media and entertainment companies 
(content providers).  This ministry has participated in the 
U.S.-India Information and Communications Technology Working Group's 
Subgroup on Media and Broadcasting.  Current policy issues of 
important to U.S. companies include: 
-- prohibition on any foreign equity interest in FM radio 
broadcasting; 
-- foreign ownership in satellite ventures up-linking from India, 
which is capped at 20 percent mandatory Indian; 
-- foreign content providers who want to downlink programming to 
India must either establish a registered office in India or 
designate a local agent, which has tax implications; and 
-- difficulty in importing film/video publicity materials and 
inability to license movie-related merchandise due to royalty 
remittance restrictions. 
 
¶29.  (U) Bio: Ambika Soni (born November 13, 1943) was born in 
Lahore (then undivided Punjab) and studied French and Spanish 
language and literature, including in Cuba.  Her husband is a 
diplomat.  She was the first woman to become Youth Congress 
president in 1975 and she headed the Congress Party's Women's Wing 
in 1998. 
 
¶30.  (U) Visit New Delhi's Classified Website: 
http://www.state.sgov/p/sa/newdelhi. 
 
BURLEIGH