India, the hottest investment destination

rediff Business Desk in Mumbai | December 27, 2005


If it's investment, it's India.

From software giant Microsoft to telecom biggies Nokia and Samsung to auto majors Honda and Toyota, global players now eye India as the most attractive destination for investment.

December 2005 alone saw a number of global business leaders in India lauding India's great economic prowess and making huge investment promises.

Microsoft chairman Bill Gates, during his visit to India, announced that the company would invest $1.7 billion in India over the next four years to expand its operations.

"India has a fantastic pool of software professionals. The world needs to benefit from this. I never thought with so little product companies software services sector will grow so strong as it has grown here," Gates gushed.

Toyota Chairman Okuda Hiroshi praised the quality of products made in India, which he said was better than even Japanese companies.

While billions of dollars have been committed to boost business in India, it needs to be seen how much of this actually turns into reality.

Here's a checklist of the big investment promises, with IT companies topping the charts.

Microsoft

Microsoft Corporation plans to invest $1.7 billion in India over the next four years to expand its operations. The amount will be deployed across select focus areas in line with Microsoft's strategic vision for India.

The funds would also be spent in making India a major hub of Microsoft's research, product and application development, services and technical support for both global and domestic companies. The software giant will hire more than 3,000 employees over a period of three to four years in India.

Intel

The world's largest manufacturer of computer chips, Intel Corporation said the company would invest more than $1 billion in the next five years to expand its operations in India and in local technology companies.

Chipmaker Intel has formed a $250-million Intel India Technology Fund that would be used for venture capital investment in technology start-ups in India.

"The pace of technology innovation is accelerating. The investment demonstrates the company's long-term commitments and builds on the foundation we created during the last ten years," said Intel chairman Craig Barrett during his visit to India.

The funds will be used to invest in companies that can benefit from the rapid growth in the domestic IT market segment in India, and provide local businesses with capital to help nurture important technologies and products developed for local use.

AMD & SemIndia

SemIndia, a consortium of overseas Indians, plans to invest $3 billion in an advanced semiconductor manufacturing facility in the country with technology from America's Advanced Micro Devices Inc.

The project -- a public-private partnership - is expected to take off next year and will lead to a world-class industry in India to meet domestic and global demands of semiconductor chips for cell phones, PCs, set-top boxes among others.

AMD will transfer high-end microprocessor and logic manufacturing technology to SemIndia, and may pick up a stake in the proposed plant, Hector Ruiz, chief executive officer of AMD Inc, said during his visit to India.

SemIndia sees Indian demand for semiconductor chips at $30 billion each year by 2015.

Cisco

Networking major Cisco's CEO John Chambers announced a $1.1 billion investment package for India. Of this, $800 million would be invested in Bangalore over the next two years. The company would pump in $750 million in its new R&D campus in Bangalore. The company plans to triple its existing head count from the current 1,400 by 2008.

Chambers said that the company is also considering India as a manufacturing base.

Automobile sector

The automobile sector is also slated to witness a lot of action with foreign car makers driving to India. According to Commerce Minister Kamal Nath, India is an attractive destination for global auto giants like BMW, General Motors, Ford and Hyundai who were setting base in India, despite the absence of specific trade agreements.

The government is also likely to grant special economic zone status and take a re-look at the tax structure for setting up testing centres and manufacturing plants in a bid to make India the automotive hub of the world.

Here's what the auto biggies have lined up.

BMW

German automobile major BMW signed a memorandum of understanding with the Tamil Nadu government to establish its car assembly plant at an investment of $38 million in five years. The German group has selected a site in Mahindra World City in Maraimalainagar, near Chennai, to set up its assembly plant.

BMW has selected Chennai as the "best location" for establishing its car assembly plant with an investment of about Rs 180 crore (Rs 1.8 billion) in five years, a statement said.

BMW senior vice president Klaus Berning told the Tamil Nadu Chief Minister J Jayalalithaa that the company had decided to establish its car assembly unit in Chennai due to the 'favourable investment climate' in the state.

Toyota

Global auto giant Toyota is planning to set up a gearbox manufacturing plant in India to serve the Asian market. Toyota is planning to invest around Rs 387 crore (Rs 3.87 billion) in collaboration with its mini-vehicle making arm Daihatsu.

The aim is to develop a compact car for the Indian market. Besides, Toyota, Honda Motorcycle, Suzuki Motor (Maruti Suzuki) and Kansai Paints are firming up plans to pump in foreign direct investment (FDI) of at least $1.5 billion in the next three years.

Fiat

Beleaguered carmaker Fiat will be sourcing components worth $10 million from India in 2006, which is expected to increase further in the coming years, and make significant investments for reviving the company. The components are being sourced for the company's 'Palio' model in South Africa.

The company has said it will resume production of cars like 'Palio', 'Petra' and the 'Adventure' at Kurla in Mumbai from January 2006. "Fiat has plans to introduce new models in India, as the company works on a revival trategy in the market," Fiat India managing director De Filippis Giovanni said.

Fiat India is getting ready to start production from its Kurla facility in Mumbai and may launch the Grande Punto soon in the country. The Grande Punto, which was successfully launched recently in Europe, is a premium B-segment category car.

Telecom sector

There's more cheer in the telecom sector as well. While LG Electronics announces an investment of Rs 900 cr (Rs 9 billion) at Ranjangaon, Samsung has planned to set up a mobile manufacturing base in India. There's demand a-plenty: the government has forecast that India will have 250 million phone lines, both fixed and mobile, by the end of 2007. Since the majority of these would be mobile connections, the Indian telecom base is seen hitting the 200-million mark by 2007 from the present 70 million.

Nokia

Finnish mobile handset giant Nokia plans to set up a manufacturing plant in Chennai with an investment of up to $150 million to meet the booming demand for its handsets in India. Production is likely to begin in the first half of 2006.

The Chennai unit will be Nokia's tenth mobile device production facility globally and will roll out India-specific entry level and mid and upper end GSM and CDMA handsets. India has skilled labour, friendly business environment and overall cost efficiency, Nokia officials said.

Nokia is the leader in India's $2.5 billion handset market, believed to have about 45 per cent market share.

LG Electronics

LG Electronics India plans to invest Rs 900 crore (Rs 9 billion) in the next five years in the production of optical storage devices, GSM-based phone handsets, and air conditioners. Of the total amount earmarked, Rs 200 crore (Rs 2 billion) will be ploughed into the segments in the next calendar year itself.

LG is the first in India to produce DVD writers. It plans to produce 33 million units of DVD writers by 2008. Most of the production will happen at the company's facility at Ranjangaon in Pune. GSM handset product line would be expanded to and capacity increased to 18 to 20 million by 2010.

LGEIL plans to increase the number of GSM models from the existing 12 to 23 by next year and a target of 1.5 million GSM handsets have been set which would comprise 10 per cent of the market share. The company's goal is to produce 20 million handsets by 2010 at the Pune unit and has already started producing the same from March this year with a capacity of 40,000 to 50,000 per month.

Samsung

Samsung Electronics has plans to invest $15 million to set up a mobile handset plant in India as it looks to corner a bigger share of the world's fastest-growing mobile market. The capacity of the handset manufacturing unit, to be built in Manesar in Haryana, will be 1 million units a year, rising to 20 million by 2010, said H C Ryu, director, telecom, Samsung India.

The plant, Samsung's fourth overseas handset-making facility, will produce handsets in the mid- to high-end price range and is due to open by the end of the first quarter of 2006, he said.

Samsung, the world's No. 3 mobile phone maker, will begin making GSM handsets and add phones for the rival CDMA technology later, he said.

Samsung will also look at exporting to the Middle East and southwest Asia after stabilising production for India.

Motorola

Motorola is setting up its applied research lab in India, with plans to invest $17 million a year in its Indian R&D activity over the next few years. Motorola believes India is the ideal region for applied research and software development, she said, adding that the country would be a focus for soft manufacturing for now, although the company was looking at investment options for handset manufacturing.

Motorola's investments in the past couple of years in India have amounted to $85 million in technology and R&D, taking its total investment to $150 million. The company is also setting up a campus in Hyderabad this year.

Investment is pouring in into other industry sectors too as the Indian economy fundamentals remain robust and perfect for global investors to make the most of this great Indian opportunity. And this is just the tip of the iceberg so to speak.

India sees big investment boom in telecoms and IT

Published: Thursday, 22 December, 2005, 08:39 AM Doha Time

NEW DELHI: Planned foreign investment in India’s booming telecoms and information technology sector is expected to double to $22bn in 2006, as the world’s top companies focus on the country, its IT and telecoms minister said.
“The world is starting to look at India seriously,” Dayanidhi Maran told Reuters in an interview yesterday.

Almost $9bn in planned investment has been announced this year, including $3bn by SemIndia and chip maker AMD, $1.7bn by Microsoft Corp and more than $1bn each by Intel Corp and Cisco Systems Inc.
“The last three or four investments have come from the US. So this is very significant for us – when companies like Cisco, AMD and Intel, Microsoft are looking at India seriously.

“They are the top of the food chain,” the 39-year-old said.
Almost all global telecoms equipment majors such as Ericsson, Nortel Networks Corp and Nokia have made a beeline to Asia’s third-largest economy, also the world’s fastest-growing major mobile phone market.

“Europe has still yet to invest except for Nokia and Ericsson. We (also) want Japanese companies to start coming and investing in India. They are looking at it very seriously,” said Maran, who is one of the youngest cabinet ministers.
Maran expected the number of new wireless subscribers to hit between 4mn and 5mn a month in early 2006.

India has 72mn mobile users, more than the population of Italy, having added 3.49mn in November, up from 2.73mn in August.
The user base is expected to soar because carriers such as Bharti Tele-Ventures Ltd are expanding their networks into untapped rural areas where more than two-thirds of the billion-plus population lives.

New Delhi-based BSNL is also in the process of floating “the mother of all orders” for equipment for 60mn mobile lines.
Maran expected more foreign mobile services firms to enter the growing sector, where further “consolidation was inevitable”.
Maran also sees strong growth in business services and IT, saying an industry study forecasting 28% growth a year to $60bn in exports by 2010 may be too conservative.

Indian Economy at its best ever
Babu Ghanta
Dec. 26, 2005

The Indian economy, whose prospects looked bleak with tsunami devastation and inflationary pressure due to soaring international oil prices at the beginning of the year, was on a roll in 2005.

According to media reports, It provided the necessary launch pad to make the country an economic powerhouse with over eight per cent growth in the New Year. Surging stock market with Sensex over 9,200 points, inflation at less than five per cent, interest rates benign, merchandise exports likely to touch 100 billion dollars and over 8.1 per cent growth in the first half of this fiscal, the economic prospects have never been so good with strong macro-economic fundamentals enabling the country to move on to the higher growth path of 8-10 per cent in 2006.

Economic pundits and market analysts are gung ho about the economic outlook in the New Year and have joined Prime Minister Manmohan Singh and Finance minister P Chidambaram, in revising upwards the growth prospects from about 7-7.5 per cent to now over eight per cent in the current fiscal.

Their optimism stems from improved performance in agriculture coupled with near double digit growth in services sector, which accounted for a little over 50 per cent of the country's over 700 billion dollar GDP and the buoyant industrial sector at a little over eight per cent growth.

But sectors like mining and energy have not performed well so far this fiscal causing some anxiety and worry signalling the need to push up power sector reforms particularly toning up the functioning of state electricity boards and hastening the liberalization of coal sector to allow large private players and foreign direct investment into the crucial area in the new year.

Both Manmohan Singh and Chidambaram have described the problems in these areas as intractable but promised to take some immediate steps to deal with them, failing which they could become a drag on higher growth.

Expectations of robust growth have lured foreign funds to invest a record 8.9 billion dollars, taking the benchmark stock index up by nearly 40 per cent in 2005 and what is significant is that there is higher than expected growth of the trade, hotel, transport and communication segment in the first half of the current fiscal.

And then there's the India-Japan kickoff + India-Korea kick off II folders

Overseas acquisitions set to top $4.5 B

Tuesday, December 27, 2005

NEW DELHI: Finally the Indian multinational companies are emerging. With overseas acquisitions set to top $4.5 billion in 2005, more and more Indian companies are stepping beyond Indian territory to expand their businesses than ever before.

This has marked a significant increase over the previous year's level of about $2 billion, and with many Indian firms getting ready to expand their presence in overseas market, the figure is set to go up significantly in the coming years.

The year 2005 has already seen 90-plus acquisitions by Indian companies, with Europe seeing the most activity. Grant Thornton’s Head of Mergers and Acquisitions, Harish H V said, “This trend is certainly going to grow. The number of enquires to conduct due diligence for overseas acquisitions has increased significantly".

$750 Million ADB Financing Facility to Help Improve India's Rural Road Network

ADB has set up a US$750 million financing facility to assist the Indian Government's nationwide rural roads program.
Rural road investment is one of the key features of the Government's poverty reduction agenda for the rural sector nationwide. The Government's rural roads investment scheme - Pradhan Mantri Gram Sadak Yojana (PMGSY) - aims to provide all-weather road connections to currently unserved villages in rural areas, where about 70% of the population lives.

Now in its fifth year, this scheme has improved 66,000 km of rural roads and another 47,000 km are nearing completion. It also has strengthened state level agencies to carry out the scheme.

The Multitranche Financing Facility, a new ADB financing modality, will be used to finance investments in these PMGSY states, for construction/upgrading of up to 30,000 km of rural roads connecting about 19,000 villages. To ensure success, the facility will also assist in planning, design, operation of the infrastructure, and in safeguards, road safety and road maintenance.

Source: Asian Development Bank More
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Upgrading Indian Highways and Improving Road Safety
MANILA, PHILIPPINES (20 September 2001) - The Asian Development Bank today approved a US$240 million loan to India to upgrade a part of the national highway system. The project will also raise road safety standards nationally.

ADB will also provide a technical assistance grant of US$700,000 to identify ways of mobilizing capital for the National Highways Authority of India (NHAI) and develop a strategy to transform the authority into a more efficiently-managed autonomous body.

The project will upgrade the 259 km Tumkur-Haveri section of the Western Transport Corridor (WTC) from a two-lane, single-carriage highway to a four-lane, divided highway.

The Rediff Interview/Morten Lund, co-founder, Skype

'India has the richest middle class'

Suveen K Sinha & Surajeet Das Gupta | December 23, 2005

Business Standard caught up with Lund, the cofounder of Skype and CEO of Bullgaurd, a P2P antivirus software company, in New Delhi, and are still trying to figure out some of his answers. Excerpts:

Is this your first visit to India?

No, it's my third. I love Delhi, even though I don't wear a watch.

How does the India story look to you?

India is moving in the right direction. India has got it all. It has huge organisations with hugely sophisticated people and the richest growing middle class of 300m people. Look at the shopping malls. They were not there when I came here three years ago.

It's a no brainer. Indian companies will be buying US, UK or German companies. We have to just go with them.

im saving a $100,000 myself to put into a fund... know of any profitable funds that i can put my $$$ into? ICICI has an india fund but above my price range.... i need something small to start off with.... i see great potential of profits in India in the next 20 years.


dude u must love business as much as i do. i love reading this stuff. mexico is another hot market