Daily Excelsior...Business

Bra brawl unlikely to burst into Sino-US trade war .....

Offshoring may become issue in US primaries .....

Gold breaks 400/oz for first time since 1996 .....

Rupee recovers dollar hits all-time lows vs euro ......

Mauritius moots double taxation treaty with India

MUMBAI, Nov 19: Mauritius Government is planning to introduce a new legislation to avoid double-taxation with Indian trade, according to Prime Minister of Mauritius Paul Berenger.

Mr Berenger was speaking at the business meet organised by the All India Association of Industries (AIAI) here today to promote bilateral trade relation between two countries.

"We are planning to set up a new institution under the new legislation. The proposed mechanism will ensure the required capacity of business and ensure the exchange of information between the two countries. We are soon planning to sign a Memorandum of Understanding (MoU) with the Government", Mr Berenger said.

The double taxation avoidance measures are expected to give a big boost to bilateral trade between India and Mauritius. According to officials around 6-billion to 8-billion per year, or one third of India’s total foreign investment is channelled through Mauritius to take advantage of the capital gains tax exemptions. At present, there are around 20,000 offshore businesses registered in the Indian ocean jurisdiction, of which 6,500 invest directly into India.

Addressing the meeting Mauritius Prime Minister informed that Mauritius was looking towards developing the country as a regional knowledge hub by encouraging investments in the Information and Communication Technology (ICT).

Mr Berenger said, "we invite investments from India in the fields of tourism, textiles especially spinning mill, sugar industry, energy production, ICT sector, etc. We are also planning to develop our country as a regional seafood hub for African countries".

Meanwhile, the 1-billion dollar cyber city, an information technology intiative fully financed by the Indian Government will be ready by March 2004.

Referring to the Cyber city, Mr Berenger said that the country is planning to develop cyber tower with cyber city. "Ultimately we want to make Mauritius a cyber island", said Mr Berenger.

Speaking at the function AIAI president Vijay Kalantri said that mauritius is no more a tourist-oriented destination but it is fast emerging as a land for business oppportunity of it and the film industry. (UNI)

EU norms for bottled water in India from January next

NEW DELHI, Nov 19: After several months of indecision, India has at last decided to adopt the European norms for permissble pesticide residues limit in bottled water from January next year basing it largely on the American method of analysis.

Of the 200 different pesticides in use in the packaged water industry in India, only 32 have been shortlisted for analysis.

The Bureau of Indian Standards (BIS), Apex National Agency of Quality and Certification, formulated the above standards and procedure way back in October 29, 2003. But, the Rs 1000 crore Indian packaged water industry, demanding relaxed standards, managed to delay the process of implementation till date.

The final decision on adoption of EU norms, was taken at the two-day emergency meeting of BIS in Bangalore last week.

The BIS has already written to all packaged water manufacturers to collect two sets of samples - one to be deposited in the nearby BIS office and the other to be sent for testing in any of the six designated laboratories. These labs are SIIR, Delhi SGS, Chennai Vimta, Hyderabad Sargam metals, Chennai Choksi lab, Indore and Reliable Analytical, Thane.

Favourable reports from these labs could enable the manufacturers to get licences for production.

The BIS has prescribed four methods for analysing the presence of pesticide which are followed by US Environment Protection Agency (USEPA), Association of Analytical Chemists (AOAC), Interantional Standards Organisation (ISO) and Indian Standards developed by BIS.

Unfortunately, the BIS is equipped for analysing only four different pesticide residues.

About six months ago, the Centre for Science and Environemnt (CSE) catapulted the issue of Indian bottled water containing a pesticide content of more than the permissible limit of 0.0001 Mg per litre in the case of individual pesticide and 0.0005 Mg per litre when taken collectively as per the EU norms. (UNI)

Maiden cluster centres coming up in India
for gems, jewellery

KOLKATA, Nov 19: Responding to the Centre’s initiative for the promotion of sector-wise business, the gems and jewellery export promotion council has planned to establish three cluster designing and manufacturing centres in Kolkata, Rajkot and Coimbatore shortly.

Annoucing this here today, GJEPC chairman Sanjay Kothari said the formal proposal for the establishment of such cluster centres for the first time in the national history had recently been submitted to the centre for approval.

Under the programme, as many as 43 such cluster centres of different export oriented sectors, besides gems and jewellery, would be set up in various parts of the country within the next few years, Mr Kothari said adding that the Centre had already earmarked a total corpus of Rs 675 crores to bear maximum 75 per cent cost of each of such units, while the remaining 25 per cent expenditure would have to be borne by the respective industries and financial institutions on mutually agreed stakes.

Further elaborating he said though the nature and facilities of these proposed cluster centres would be somewhat similar to those currently being provided to the special economic zones except that there would be no exemption from any central or state taxes.

However, in terms of availability of all infrastuructural and business promotional facilities, there should not be any problem, Mr Khorati pointed out.

Besides the three gems and jewellwery cluster centres, three more clusters would come up in Tirupur, Pantipath and Ludhiana for the garments and sports goods industries respectively, the GJEPC Chairman informed.

About the present export scenario of the gems and jewellery sector Mr Khothari said during the last financial year the total Indian exports in this sector crossed the record 9.1 billion dollar marks with about 78 per cent of which accounted for exports of diamonds only.

Keeping in mind the healthy 12 per cent annual growth the council had targetted to touch the 16 billion dollar mark in terms of export by 2007 to enjoy a little more than one per cent share of the total projected global gems and jewellery market of more than 1,600 billion dollars.

Though the USA, Canada and Europe continued to dominate the Indian gems and jewllery export markets accounting over 75 per cent share of the country’s total exports in this sector annually, during the past couple of years sales in the Middle East, South East Asia and Australia had increased manifold.

Expressing concern at the growing competition in designing and manufacturing of jewelleries and other precious metals particularly from China, Belgium and Israel, Mr Kothari boasted that despite all out attempts their competance and quality still lagged 20 years behind.

However, we are not complacent and already geared up ourselves to meet any challenge and continuously improve the quality to remain way ahead of others, he said.

About his other future plans following the inauguration of Manikanchan(gems and jewellery park),the country’s first Greenfield SEZ in Kolkata yesterday, Mr Kothari said with a view to impart state-of-the-art training in designing and manufacturing of jewelleries, the GJEPC had set up an exclusive Indian institute of gems and jewelleries for the Indian artisans in Mumbai at a cost of Rs 16 crores.

The formal inauguration of the institute was slated for November 22, he said.

We also have a plan to establish a similar institute in Kolkata within the next couple of years for the benefit of vast majority of these artisans who hailed from West Bengal, Mr Kothari said and hoped that within the next one year the amount of export of gems and jewellery from Manikanchan, the SEZ unit, would cross the Rs 1000 crores mark from Rs 387 crores achieved during the current fiscal so far. (UNI)

Aprilia to drive in Indian markets with Hero Motors

NEW DELHI, Nov 19: Europe’s second largest motorcycle and scooter maker Aprilia today entered the Indian market in partnership with Hero Motors, a part of 7,800-crore Hero group, to offer motoscooters in the country by the end of 2004.

Italy-based Aprilia would also be sourcing engine components and vehicles from India as part of the agreement.

The partnership, which is for a period of 8 yrs (renewable), will see the two companies launching three scooter models starting from the 75cc scooterette to 125cc motoscooter.

Hero Motors managing director Pankaj Munjal said they would invest Rs 135 crore to set up a new assembly facility at Ghaziabad. The investment would be spread over a period of three years, he said.

The assembly would have a capacity of 4.5 lakh vehicles per year.

"Around 20 per cent of our production from this facility will be outsourced by Aprilia for the European markets," he said.

The company is eyeing to capture a 10 per cent market share of the ungeared scooter segment in the next one years.

"Within next two years we expect a turnover of 70 million dollars. Hero Motors will pay royalty per vehicle to Aprilia in turn for its brand name and technical expertise," he said.

The agreement, which is in the form of trademark and licensing will also entail Aprilia buying back vehicle for the European and other growing markets like south east Asia, Latin America and Africa at competitive prices.

"We had been looking at the Indian market for quite long and with this agreement, which is a win-win situation for both the companies, we expect to cut manufacturing cost by 20-30 per cent as compared to the production cost in Europe," Aprilia chairman and founder Ivano Beggio said.

Asked whether Hero Motor was also looking at bringing in motorcycles from Aprilia stable, Mr Munjal said, "currently a feasibility study is on for this purpose," though emphasising that the this would only be for the higher CC motorcycles.

"We plan to be an integral sourcing base for Aprilia for design of vehicles, scooter engine, component and fully manufactured vehicle," Mr Munjal said.

Elaborating on the size where they would launch the product, he said while the young female segment and the family utility segments have a market of close to 400,000 vehicles each, the motoscooter segment, aimed at youngsters, was relatively smaller in size, however "we expect a growth in these segments with time." (UNI)

HP gets agressive, says Merger with compaq
paid-off in India

NEW DELHI, Nov 19: Hewlett packard today said that since its Merger with compaq six quarters back it has seen a 100 per cent increase in sales of servers in India and launched a new product in low-end server market to grab more market share.

"Merger has done well. Since the Merger, number of servers sold has gone up by more than 100 per cent and the company has increased its market share by 6.7 per cent," Ms Neelam Dhawan, vice president, enterprise system group HP said.

"In July-September 2003, we saw 11 per cent increase in number of servers sold and 60 per cent increase in revenues year-on-year. Our market share in July-September increased by 0.6 per cent over previous quarter" Ms Dhawan said, adding that a majority of servers sold were in the low-end.

"Low-end servers account for 58 per cent of the market. Our products have done well in this segment and we want to further increase market share in this segment of the market," she said.

For the entry-level server market hp today launched, a product priced at Rs 94,900 and expects to sell 500 units of it in the next quarter and through it increase existing market share of 31 per cent in the 44,000 unit server market in India by two per cent. The new product, named HP proliant ml 150, comes with an Intel xeon processor with 730 Giga Bite storage capacity.

"With the features ML 150 is loaded with, it will be the cheapest in the market," Mr Vaibhav Phadnis, country manager - ISS, enterprise system group, HP, said.

The new product from HP can also be scaled up to 2 Intel Xeon processors and can support windows and linux.

HP proliant ML 150, designed exclusively for Asia Pacific in Singapore, will gradually replace ML 330. HP will, however, continue to market TC2120 low-end server which costs Rs 70,000 and ML 350, which costs 1,30,000.

ML 150 is targetted at small businesses, banks and insurance companies. "Most of the buyers are expected to be banks and insurance companies who would like to use ML 150 for branch automation," Ms Dhawan said.

HP also launched today latest version of its system management software "HP systems insight manager".

"This software came to us through Merger and we have improved up on it," Mr Phadnis said.

HP systems insight manager employs a modular architecture enabling client, storage, printer and power management in addition to server deployment, performance and workload management from a single console. (UNI)

Outsourcing does not always result in savings: Study

NEW DELHI, Nov 19: Contrary to general belief outsourcing does not always result in cost savings, according to a survey.

Only 21.1 per cent of companies surveyed by people3, a Gartner company, reported a cost savings greater than 20 per cent as a result of their it outsourcing efforts, while 18.4 per cent of companies did not achieve any cost reductions and 9.2 per cent experienced an increase in costs.

"There’s an assumption by many companies that they can save a large percentage of their budgets by outsourcing some or all of their it capabilities, however, the true savings are not always as promising as one would expect," said Lily Mok, a senior consultant at people3.

"Many companies often neglect to factor in all costs associated with managing the outsourcing engagements, which average 4.5 per cent of the total contract value and can be as high as 15 per cent. It is important to set reasonable goals and expectations regarding the benefits that could be achieved through it outsourcing," he said.

According to the report "embarking on a successful it outsourcing journey: Refocusing Your Human Capital Management strategy" by people3, additional costs can be difficult to quantify.

The report says factors relating to additional costs include time and effort spent during knowledge transfer, addressing cultural differences, putting infrastructure, disruption in the current work processes, increased turnover of IT employees that possess critical IT knowledge and skills, lost productivity, and lowered employee morale. All of those factors can erode and even exceed the potential cost savings from the outsourcing efforts, the report said.

"Companies are often unsuccessful in their outsourcing efforts because they overlook the human capital implications of IT outsourcing and do not have a robust, step-by-step action plan to address those issues," said Mr Mok.

"Our outsourcing survey results reveal that only 39.5 per cent of companies have a human resource action and change management plan to support a smooth transition and execution of the outsourcing strategy."

The report for a successful it outsourcing initiative an it human capital strategy that is integrated and aligned with the it sourcing strategy is needed.

Apart from that and other factors a roubst communications plan is a must. (UNI)

Indian laws compliant with trips under WTO: Kanwal Sibal

BANGALORE, Nov 19: India today maintained that its laws were compliant with the trade related intellectual property rights, dismissing US concern over New Delhi’s "reluctance" to adopt trips compliant patent law.

"Trips continues to be a doubt in the minds of people, but facts will prove otherwise. Indian laws are trips compliant, but there is a demand internationally for a stronger trips regime in India, but we are fully complying with our obligations under WTO," Foreign Secretary Kanwal Sibal told reporters here on the sidelines of the second India-US High Technology Cooperation Group (HTCG).

Earlier, in his address, US private sector chairman of the HTCG and Boeing corporation senior vice president Thomas Pickering expressed concerns over India’s "reluctance" to adopt trips compliant patent law even as the US felt that Indian firms have a high regard for protection of proprietary information.

"By the same token, India’s continuing reluctance to adopt a trips compliant patent law continues to raise doubts about the commitment of the Government to developing the full complement of law, enforcement, and legal practice required to afford substantial legal protection," Pickering said.

The IPR issue had an impact on private companies’ willingness to conduct fundamental R&D in India.

"The issue is complex, partly rooted in misperceptions, partly rooted in India’s long standing opposition to international patent standards," Pickering added. (PTI)

Bra brawl unlikely to burst into Sino-US trade war

SINGAPORE, Nov 19: The imposition of US quotas on Chinese bras and other garments will probably be the first of a raft of pre-election trade skirmishes, but mutual strategic interests make a full-blown trade war unlikely.

Trade spats can always get out of hand, and congressional anger will presumably grow in line with low-cost China’s ballooning trade surplus with the United States. Beijing, too, cannot be expected to take US sanctions lying down.

But analysts said on Wednesday the sheer scale of two-way economic ties, plus Beijing’s importance to Washington on the north Korean nuclear crisis and other geopolitical issues, meant both capitals had a stake in keeping a lid on the textiles row — just as they seem to be doing over the value of China’s currency.

"What I imagine is we will see both parties backing away from this," said Lois Dougan Tretiak, China director of the economist corporate network in Beijing.

China, with an increasingly sure grasp of US politics, recognised that the United States was already gripped by election fever and so was seeking ways to minimise trade friction, short of acceding to demands that it revalue the yuan, Tretiak said.

These steps included promoting the outflow of yuan to reduce upward pressure on the currency and conducting high-profile purchasing trips to the United States.

"What China probably recognises is that it’s important to keep the target narrow — to not have China itself become a focal point in the debate between the democrats and the republicans in 2004," Tretiak added. "So it would be very helpful if they don’t make a big to-do about things of this sort."

The Commerce Ministry in Beijing expressed deep regret about the Bush administration’s decision to grant so-called safeguard relief on Chinese knit fabric, dressing gowns and bras. It reserved the right to protect its interests through the World Trade Organisation, which it joined in late 2001.

But in fact, China’s WTO accession pact explicitly granted importing states the right to impose safeguards until the end of 2008 because of forecasts that China would more than double its share of the global apparel market to nearly 50 percent.

Sensitive to foreign concerns, China has already taken steps such as reducing export tax rebates to slow export momentum.

"The Chinese certainly don’t want to get involved in any big fight," said Mark Michelson, vice-chairman of Apco Asia, a public affairs and strategic communications firm. "I’d be really surprised if there was an intent to start a fight here."

From the perspective of Washington, President George W Bush must be alert to political concerns in the run-up to elections in November 2004. Not only will Bush’s re-election bid be determined in a clutch of manufacturing states, but key seats are up for grabs in the textile heartlands such as south Carolina.

"So the administration has to be responsive to some degree, but my guess is that this is to throw a bit of a bone and hope that it works," Hong Kong-based Michelson said.

But it was not in Washington’s interest to pick a fight with China when it was seeking its cooperation on everything from North Korea to the war on terror. "China is just too important at this point in terms of security issues," Michelson said.

That is not to say there are no risks for financial markets, which drove the dollar to record lows against the euro on the textile news. Protectionism could slow US growth, raise prices and trigger capital flight, especially if China — a big buyer of US Government securities — took umbrage at Washington’s move.

"I doubt it’s a serious return to gross protectionism that would be of importance to the market. But we are going to see more of this because, as we head into the election, the important states are ones where these issues as critical," said Pierre Ellis with decision economics in New York.

Indeed, the Bra battle follows a bruising row over Washington’s imposition of tariffs on steel imports, which the WTO has ruled as illegal.

"If we have a recovery that continues without job growth, I think the rhetoric is going to increase," said Robert Lees, Honolulu-based executive adviser for consultants bearing point.

"The hue and cry here is that it just ain’t fair," said Lees. "these could be very, very difficult times coming up over the next year or two. This does not bode well for US-China relations."

Calling himself a friend of China, Lees said Beijing needed to allay fears — among blue-collar and high-tech workers alike — that US business was not being treated fairly. The US deficit with China was 103 billion in 2002 and totaled 89.7 billion in the first nine months of this year alone.

"China needs to do a better job of opening its market. The US put up with Japan having a closed market for ever and ever until their industries were absolutely powerhouse-dominant, and I just don’t think it’s going to work this time," he added. (AGENCIES)

Offshoring may become issue in US primaries

BANGALORE, Nov 19: The jobless recovery in the United States could lead to the backlash against it offshoring becoming an issue in the US Presidential primaries next year, Information Technology Association of America president Harris Miller has warned.

"Though there has been growth in the first three quarters of the year, this has not resulted in job creation. In fact three lakh jobs have been lost in the IT sector in the US since the downturn began three years ago and this could become an issue in the presidential primaries," Mr Miller told IT industry leaders at a CEO forum organised by the national association of software and service companies here last night.

In addition to political factors, he said the backlash against offshoring was a result of the lack of awareness in the United States about the advantages that could result from globalisation.

He also pointed out that a certain degree of "arrogance" had led the United States to believe it would continue to dominate the software scene world-wide.

"The US software industry did not anticipate competition from other countries. They committed the same mistake as the auto-makers did with Japan in the 1960s," Mr Miller observed.

India, he said, would have to promote itself as a consumer market in addition to the image that it currently enjoys as a premier software producer. (UNI)

Gold breaks 400/oz for first time since 1996

SINGAPORE, Nov 19: Gold broke above 400 an ounce on Wednesday for the first time since March 1996 on a weakening US dollar and global security worries.

The spot price rose as high as 400.25 an ounce before retreating to just below the milestone mark, getting its latest lift from the dollar’s slide to all-time lows against the euro and to near three-year troughs versus the yen.

"I think if we get through 401, we can rally quite quickly to 405," said Martin Mayne, associate director at NM Rothschild in Sydney. "If it doesn’t, it will pull back."

The dollar was hurt after Washington said it would impose import quotas on Chinese textiles, raising fears protectionism would hurt the US economic recovery. A weaker dollar generally boosts gold.

Dealers said attacks on US-led troops in Iraq and fears of fresh Al-Qaeda attacks had also raised interest in safe havens such as gold and US bonds.

"A weak dollar is a factor in the market, but I think people psychologically want gold to break 400. That’s why people are worried that once 400 is tested, that will trigger a sell-off," said a bullion dealer in Sydney.

At 0121 GMT, gold was quoted at 399.50/400.25 an ounce, up from New York’s last quoted level of 396.50/397.25.

The dollar was at 108.15 yen while the euro was at 1.1962. (AGENCIES)

Rupee recovers dollar hits all-time lows vs euro

MUMBAI, Nov 19: The rupee snapped out of its week-long losing streak against the US dollar and staged a smart 14-paise recovery at 45.48/49 in early tradings today as the Greenback’s crash overseas to an all-time low against the euro, propelled strong dollar inflows.

Opening on a firm footing at 45.56/57, the domestic currency further rallied on robust export and NRIs dollar remittance and feeble import demand following the dollar’s dip to its all-time low against the euro and three-year troughs versus the yen in asian markets after washington said it would impose import quotas on Chinese textiles, fuelling fears of protectionism, dealers said.

Rupee was trading at 45.48/49, up by a whopping 14 paise from its Tuesday’s close of 45.62/64.

Forex dealers said despite the early gains of the rupee on the back of the falling dollar overseas, the extent of intervention by state-run banks would dictate the domestic currency’s movement later in the day.

The interbank call rate opened firm at 4.40-4.50 per cent as compared to 3.75-4.25 per cent of its previous close on routine demand for funds in the first week of the reporting fortnight, while Government bonds opened 10-20 paise higher on bargain buying at previous lower levels.

Reports from tokyo said the dollar floundered near all-time lows against the euro and three-year troughs versus the yen there today after Washington spoke of import quotas on Chinese textiles, raising fears of protectionism.

The dollar, already battered by escalating tensions in the west Asia, fell against the euro, hitting a record low of USd 1.1975 per euro in early tradings.

New York-based traders said the euro also got a boost after it breached a key technical level of usd 1.1860, prompting investors to step in quickly and buy.

Against the yen the dollar was near a three-year low of 107.86 yen hit in late October and again on November 10.

The market has adjusted its gaze to the key 1.20 level.

On Tuesday, the US commerce department said it would limit imports of Chinese clothing.

The dollar was also weak against other European currencies. (UNI)