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INDIA NEWSLETTER PUBLISHED BY THE EMBASSY OF INDIA VIENNA YEAR 1 | ISSUE 10 | OCTOBER 2011

State Visit of the President of India to Austria

 October 4-7, 2011


Special | State Visit President Patil‘s state visit to austria, october 2011 President Pratibha Patil arrived in Vienna on October 4th for a four-day official visit to Austria. Patil, who flew in from Switzerland, was received at the airport by the country's Science and Research Minister Karlheinz Tochterle and was given a 21-round gun salute. During her visit here, President Patil held bilateral talks with President Fischer and met the Federal Chancellor of Austria, Werner Faymann. The President also visited the Austrian Parliament and met the President of the National Council, Barbara Prammer and members of the Friends of India Group in the Austrian Parliament. The bilateral talks yielded two memoranda of understanding (MoU) that were signed by both parties. The first MoU was between the Ministry of Railways and the Austrian Ministry of Transport and will help in Technology transfer to the Indian Railways. The second one, signed by the department of Science and Technology

and the Austrian Science Fund, looks to augment research in mutual interest areas. Besides the two MoU, a bilateral cooperation agreement to strengthen and develop the economic relations between the two nations was signed between the Austrian Federal Economic Chamber (WKO) and the Federation of Indian Chambers of Commerce and Industry (FICCI). President Patil and President Fischer also opened the Austria-India Economic Forum hosted by the WKO and brought together a delegation of 45 Indian corporates with several Austrian businessmen. On her meeting with Austrian Chancellor Werner Faymann, President Patil stressed the importance of more cooperation in the energy sector. India wants to expand its proportion of renewable energy sources, and is interested in Austrian know-how in

photovoltaic and wind energy technology. On the last day of her visit, President Patil visited Salzburg and received a musical farewell as she visited a museum dedicated to Salzburg's iconic composer Mozart, concluding her four-day visit to Austria. President Patil was seen listening to a captivating performance by Austrian singers and pianists at the Wolfgang Amadeus Mozart Museum in Salzburg. Earlier, Gabi Burgstaller and Heinz Schaden, hosted a banquet in the honour of the Indian President upon her arrival in Salzburg city on 6th October. In overall terms the President was extremely satisfied with her two-nation visit. She noted that the visit has maintained the momentum of high-level cooperation and interaction, and that it would provide an impetus for further development and consolidation of bilateral cooperation.

Ambassador Dinkar Khullar and Prof. Christoph Kratky signing the MoU in the presence of President Patil and President Fischer

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State Visit | Special President Patil‘s state visit to austria, october 2011 (cont‘d)

President Patil with President Fischer and President of the Austrian Federal Economic Chamber Dr. Christoph Leitl During the visit, President Patil, accompanied by a delegation of 40 Indian corporates, opened the Austria-India Economic Forum at the Austrian Federal Economic Chamber. The event was opened by official addresses by both President Patil and President Fischer.

EXCERPTS FROM PRESIDENT PATIL‘S SPEECH

EXCERPTS FROM PRESIDENT FISCHER‘S SPEECH

“Growth rates of over 20 percent in our bilateral trade registered in the current year are impressive by any standards bu especially so in today‟s global economic scenario. However, the current level of our trade of about 1.1 billion is below the potential of our two countries. We must jointly endeavour to identify new openings and to optimise the utilization of existing opportunities to achieve this potential.”

“Through universities, research institutes and specialized global companies, Austria has been supporting the technological development in a number of countries, including India, in the framework of our possibilities. This is especially true of the steel industry where approximately 70% of the world‟s iron and steel production are applying process and production technologies developed in Austria”

“India has been focused on improving its infrastructure, and investments of close to one trillion US Dollars would be required in the coming years to implement theses plans. This provides an excellent investment opportunity for foreign companies.(…) Austria has well-known strengths in these fields. (…) Austrian strengths in infrastructure, automotive and environment friendly technologies provide a good complimentary to the requirements of the Indian economy.”

“The first steel-making plant using the „Linz-Donawitz‟ Process ever implemented outside of Austria was built in Rourkela, India in 1958. Today India is the 5th largest steel producer in the world and is expected to become the second largest producer of crude steel already next year.”

“There is great potential in India for Austrian companies in new areas of cooperation—like infrastructure development, automotive industry, healthcare, electrical and elec“Austria is known for the high quality of its research insti- tronics industry and, in particular, environmental technology tutions oriented to industry and commercial application. I and non-conventional energy like solar and wind energy in the future.” see this as an important component of our collaborations” October 2011 - India-Austria Newsletter | 3


Special | State Visit President Patil‘s state visit to austria, october 2011

President Patil welcomed by Minister Karlheinz Tochterle

President Patil in the Austrian Parliament President Patil and Chancellor Werner Faymann

President Patil in high level talks with President Fischer

President Patil and Mag Barbara Prammer

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President Patil with President Fischer at Schloss Hellbrunn


Economy & Business | News SEPTEMBer 2011 IN THE NEWS HIGHLIGHTS UN General Assembly. Addressing the UN General Assembly, Indian Prime Minister Manmohan Singh said India wants to quicken the pace of its transformation in partnership with the international community. "A fast growing India can expand the boundaries for the global economy," he said, adding developing countries need investment, technology and market access for their products. Despite global headwinds, Indian economy has been expanding close to 8%, the second fastest growth in the world after China. In the backdrop of protectionist measures in several developed countries, Singh called upon the international community not to let economic slowdown trigger barriers to movement of people, services and capital. "We should not allow the global economic slowdown to become a trigger for building walls around ourselves through protectionism or erecting barriers ...," he said. Singh said the world economy is in trouble. "The shoots of recovery which were visible after the economic and financial crisis of 2008 have yet to blossom. In many respects the crisis has deepened even further," he said.

energy efficiency measures. Sixty Cities are proposed to be developed as Solar Cities during the Eleventh Plan period including four Model Solar Cities and 10 Pilot Solar Cities. The Master plan for each Solar City is being prepared to assess and utilize various renewable sources including Solar, Wind, Municipal Waste etc.

2,000 jobs and help to drive localisation of GE‘s products. It will initially have 450,000 sq ft of space, which can go up to 1 million sq ft. In India, GE expects to grow its business by 20-30% this year. It aims to increase its energy business in the renewable energy segment to $250 million in 2012 -13, from $100 million this year.

economy

Pharmaceuticals. Indian Pharma exports is likely to register 17-20% growth this fiscal, touching the $12 billion mark. Last year India exported $10.3 billion worth of pharma products registering 17.5% growth over a year before. Growth is expected to be between 17-20% in this fiscal, according to Pharmexcil. India's largest export destination is still the USA followed by the UK, Germany, South Africa and Russia. Segment-wise generics account for 58% of the total exports, active pharmaceutical ingredients (APIs) 40% and Ayurvedic/herbal/ neutracueticals two percent, according to industry reports.

Inflation. Both the government and Reserve Bank have taken a number of steps to address the issue of high inflation. Among the measures taken are: reduction of import duty on skimmed milk powder, petrol and diesel, reduction of customs duty on crude oil, ban on export of edible oils and pulses, suspension of futures trading in rice, urad and tur dal and extension of stock limit orders for pulses and rice. Exports. India‘s exports increased by 44.2% to $24.3 billion in August, while imports rose 41.8% to $38.4 billion, leading to a trade deficit of $14.1 billion. Although the growth in exports is much above the government‘s target, it has slowed down when compared to the previous month. Exports had surged 81.79% to $29.34 billion in July, while imports had grown by 51.52% to $40.42 billion, resulting in the month‘s trade deficit of $11.08 billion.

The prime minister also highlighted the need for reform of governance systems of international financial institutions, stating "deficit in global governance" was one of the several things which can be done collectively. Investment in Infrastructure Development in Agriculture. The Government is implementing various schemes/ programmes is to increase investment in the infrastructure development in the agricultural sector. Some of the major schemes in this regard are, Development and Strengthening of Infrastructure Facilities for Production and Distribution of Quality Seeds; National Mission on Micro Irrigation; Development/Strengthening of Agricultural Marketing Infrastructure, Grading & Standardisation; Gramin Bhandaran Yojana; and Rashtriya Krishi Vikas Yojana. Development of solar cities in India. The Ministry of New and Renewable Energy is implementing a programme on ‗Development of Solar Cities‘ which aims to reduce a minimum of 10% of the projected demand of conventional energy of the city through renewable energy installations and

Forex Reserve. India‘s foreign exchange reserves reached an all-time high of $321 billion, up by $1.6 billion for the week ended September 2. The increase was on account of an increase in the gold reserves by $3 billion. According to the Reserve Bank of India, gold reserves stood at $28 billion for the reporting period. The previous high was reached in the week ended July 29, when the reserves touched $319 billion.

Business & industry General Electric. US conglomerate General Electric (GE) will invest $200 million to build an integrated multi-product manufacturing facility in Pune. The facility will create

—-. Aurobindo Pharma Ltd and Russiabased OJSC Diod have formed a joint venture, Aurospharma Company, to manufacture and sell pharmaceuticals in Russia, Belarus and Kazakhstan. Diod, a manufacturer of healthcare equipment and nutrition supplements, and the Hyderabad-based Aurobindo would have equal stake in the venture. The financial aspects of the deal were not disclosed. Railways. The Asian Development Bank (ADB) will extend loans of up to $500 million to Indian Railways to help improve its services along some of the busiest freight and passenger transport routes. The investment will target various routes in Chhattisgarh, Orissa, Maharashtra, Karnataka and Andhra Pradesh, including the critical 'golden quadrilateral' corridor that connects Chennai, Kolkata, Mumbai and New Delhi. Many of these lines carry a large number of passengers, along with large quantities of minerals and other important freight. They also traverse large rural stretches in which a large number of people live below the poverty line. Automotive. German luxury carmaker Audi is looking at the potential of smaller cities and towns in india as it undertakes its journey to become second largest player in Indian luxury car market. The company launched a new dealership in Ludhiana this June and will start its dealership at Surat soon. It will roll out the cars in Lucknow, Surat, Indore and Coimbatore from 2012 onwards.

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News | Economy & Business SEPTEMBer 2011 IN THE NEWS (CONT‘D) Environmental Technology. Weiss Umwelttecknik GmbH of Germany and part of the diversified Schunk Holding group, announced the setting up of an Indian subsidiary, its 29th across the globe, to address the growing market directly with its products that help test and simulate real environment conditions. The company management, which has a big hold on real environment testing equipment, with manufacturing plants spread all over, including one set up in China, may also consider another manufacturing unit in India within the next two years, according to Mr M.A. Gaffar, Managing Director of Weiss India. After the formal announcement of the new arm, the company disclosed that it has access to about two acres of land at the Aerospace Park coming up near the new international airport —-. Chennai based BGR Energy is close to finalising a deal for getting into the solar power industry, with Flagsol GmbH, a subsidiary of Solar Millennium of Germany. It is learnt that the Indian partner will hold 60% stake in the joint venture that would be created. For starters, the joint venture is looking at setting up a 50-MW concentrated solar power (CSP) plant in Rajasthan. The plant of that size would call for an investment of about €100 million. Telecommunications. US Telecommunications company AT&T may soon act as a business incubator for a handful of telecom focused technology startup companies in India. As part of this ‗speed dating‘ programme for entrepreneurs, AT&T would also work with venture capital firms to identify suitable projects and bring potential companies from India to ‗fast-pitch‘ sessions in Silicon Valley (US), according to Mr Sanjay Macwan, Assistant Vice President, Technology and Innovation, AT&T. This initiative is part of AT&T‘s larger global strategy of engaging with both internal stakeholders and external parties for driving innovation in the areas of internet and network technologies, IP and voice services, information and software systems. Coal. GVK Group, a leading infrastructure developer, announced that it has acquired Hancock coal and infrastructure projects in Australia, one of the largest integrated coal development projects in the world, for $1.26 billion. GVK has acquired a shareholding up to 79% in the Alpha and Alpha West Coal Projects, located in the Galilee Basin in Queensland. It also acquired 100% shareholding in the Kevin's Corner

Coal Project and also 100% shareholding in the rail and port projects. The consideration for the acquisition is $ 1.26 billion to be paid in a phased manner. The infrastructure project involves the development, ownership and operation of an integrated infrastructure development consisting of a 495 km rail line and a 60 million tonnes per annum port at Abbot Point. At full production the three coal projects are together expected to supply about 84 million tonnes per annum to the global sea-borne coal market. The first phase of production, expected to start in 2014, envisages a total production of over 30 million tonnes per annum of high quality thermal coal, said the statement. GVK plans to invest $10 billion in the first phase for the development of coal, rail line and port projects. Mechatronic. Finnish group Stera, which specializes in production of mechanical and electronic assemblies, inaugurated its factory in Chennai. The factory, set up at a cost of 3 million euros (around $4 million), is its first in India. "We looked at many locations in India but Chennai emerged as the frontrunner due to its talent pool and also because many of our clients are present nearby," said Heikki Ajanko, president and CEO of Stera Technologies. The Chennai facility is the company's eighth worldwide. Stera has six factories in Finland and one in Estonia. It also has presence in China through a co-operator. Stera has an annual turnover of $100 million. Financial Services. Reliance Capital has signed a memorandum of understanding (MoU) with Japan-based Nippon Life Insurance for collaboration opportunities, including strategic partnership, across all Reliance Capital promoted financial services businesses. Under the MoU, both parties have decided to explore various opportunities and exchange views on collaborating in possible business operations, an official statement issued here said. Education. The Indian Institute of Management, Lucknow has tied-up with The Kelley School of Business (KSB) at Indiana University, US, for mutual co-operation for excellence in global business education.Both the institutions will collaborate on research, faculty and student exchange programmes. The collaboration will include extensive research.The major areas in which both the business schools will work upon are research, collaborative case studies for teaching purpose and faculty research workshops. The collaboration seeks to pro-

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duce events such as webinars, video conferences and regular conferences. Possibility of launching a dual-degree programme in Business Analytics and Global Strategy is also being considered.

international India-Switzerland. India and Switzerland have signed a MoU on financial dialogue that will pave the way for greater cooperation between the two countries‘ tax authorities, a move that will allow unearthing black money stashed in Swiss banks. The MoU was signed in the presence of the President, Ms Pratibha Patil, who was on a state visit in Switzerland, and her Swiss counterpart, Ms Micheline Calmi-Rey. The MoU deals with creation of a useful forum for exchange of views on financial and macroeconomic issues. India-Germany. Bilateral trade between Germany and India is set to touch € 20 billion this year, a senior official of IndoGerman Chamber of Commerce said. "It was Euro 15.5 billion last year.. this year we are expecting to reach Euro 20 billion..", Indo-German Chamber of Commerce Regional Director S Raj told reporters here. He said there were about 120 German companies in India employing more than 1.5 million people. India-UK. The UK India Business Council (UKIBC) entered into a partnership with the British Deputy High Commission and Federation of Indian Chambers of Commerce and Industry (FICCI) to strengthen Indo-UK cooperation in the skills and education sector. UKIBC also plans to explore the possibility of entering into a tie-up with companies such as Hero Honda and Mahindra and Mahindra for skill development, said Mr Roy Newey, Group Board Director, UKIBC Board Member. Healthcare, retail, construction, manufacturing, travel and tourism and food processing among others would be the key areas for skill development. India-Netherlands. The Netherlands is the fifth-largest investor in India. Over the years, new companies have opened offices and existing companies have expanded their operations in India. India recently granted permission to Rabobank International to open its branch in Mumbai. A branch of the State Bank of India will also be opened in Amsterdam shortly. This is expected to not only boost the confidence of existing Indian companies based in the Amsterdam region, but also encourage


Economy & Business | News/Articles SEPTEMBer 2011 IN THE NEWS (CONT‘D) more Indian firms to come to The Netherlands. Currently, investments are largely in the field of agri-business, water infrastructure & water management, automotive, biotechnology & life sciences, healthcare, ICT, real estate and alternative sources of energy. The Dutch have also initiated mutual cooperation on sustainable and responsible business with India, which will be applicable across sectors. Both countries have signed an memorandum of understanding (as of July 2011) on corporate governance and corporate social responsibility. India-Estonia. India has signed a double taxation avoidance agreement (DTAA) with Estonia and has also forged a pact to work with the European nation in the fields of information, communications and technology (ICT). India and Estonia also reached an agreement to work together in the fields of information, communication and technology, education and e-governance. Further, India will establish a Chair on Cyber Security in Tallinn University and a Chair on Indian languages, literature and history in another of Estonia's universities.

India-South Africa. India and South Africa set the target to increase two-way trade between both countries to $15 billion by 2014 from $10.64 billion while concluding the India-South Africa CEOs Forum. This was the second meeting of the forum. The first one was held in Johannesburg last year, where five sector-specific working groups were created to ensure seamless trade and business transactions between both countries. India-Uruguay. India has signed a double taxation avoidance agreement (DTAA) with Uruguay. This agreement provides for effective exchange of information including banking information besides assistance in collection of taxes between the tax authorities of two countries. India-Israel. On going efforts to sign an Free Trade Agreement (FTA) between Indian and Israel would lead to a change in the composition of trade between the two countries and bring focus into new sectors such as information and technology (IT), agriculture and biotechnology, Mr Alon

Ushpiz, Ambassador of Israel in India, said.The FTA would ensure a higher volume of trade for both the countries, Mr Ushpiz said at an interactive session, organised by the Indian Chamber of Commerce. Currently the volume of bilateral trade between the two countries stood at $5 billion and is expected to exceed $12 billion in another five years following the FTA.

Quote of the Month “When it comes to bilateral trade, I have to say we are a bit jealous of India-Switzerland figures. So (pointing at the Austrian corporates at the India-Austria Economic Forum) let„s catch up!” By Austrian President, Dr. Heinz Fischer

India to become world’s thirdlargest economy

India most-preferred new destination for global retailers

India is expected to overtake Japan to become the world‘s thirdlargest economy in 2011 in terms of gross domestic product (GDP), measured according to the domestic purchasing power of the rupee, also called purchasing power parity (PPP).

India may not have opened its retail industry to foreign investors yet, but it's the most preferred new destination for global retailers who bet on emerging markets to offset worsening economic conditions in the developed world. India topped the list in a survey of 323 international retailers about the markets they entered for the first time last year, done by property agents CB Richard Ellis.

In 2010, the Japanese economy was worth US$ 4.31 trillion, with India trailing close at US$ 4.06 trillion. Due to the unfortunate devastating tsunami and earthquakes in March 2011, Japan, however, is expected to contract in 2011. The International Monetary Fund‘s (IMF) estimates state that the Japanese economy will contract by 0.7 per cent this year while the Indian economy will grow at 8.2 per cent. According to IMF forecasts, India and Japan were at par in 2011, but the disaster in Japan has brought the event forward. As suggested by an earlier report by consultant Price Waterhouse Coopers (PwC), the Indian economy would move ahead of the Japanese economy in 2012. The University of Pennsylvania‘s PPP tables state that India has already moved ahead of Japan in 2010. It is estimated that the Indian economy will reach a size of almost US$ 5 trillion by the end of 2011. Countries from all over the world now consider India to be a fast growing economy with great opportunities. The benefit of having a bigger economy gives the government more bargaining power and clout abroad. A change in the ranking points to broad trends in the growth trajectories of nations. ― It‘s a long process of development, but this shows that the markets are expanding and there is robust demand within the economy,‖ said Siddhartha Sanyal, Chief Economist, Barclays Capital.

"If many retailers are already entering the Indian market, then I don't think there is so much of an entry barrier," said Neville Moss, director – head of EMEA Retail Research at CB Richard Ellis. "International retailers will just be more confident on the sense of ownership given in a foreign country," he added. That could by why several delegates of global retailers at the annual World Retail Congress in Berlin seem to have taken a waitand-watch approach to investing in India. "We think India has the potential but, honestly, we haven't even studied the market yet," said Janet Grove, vice chair at US department stores chain Macy's, which is now gungho on China. "India is down the road, but first will be China." According to the CB Richard Ellis study, which covered 75 countries, eight retailers entered India last year while seven entered second-placed Turkey. In terms of international retailers present in a country, India still ranks 35 with just about one-fourth retailers present in the country. China is ranked seventh, with 46% retailers' presence, in the list topped by the UK with 57.6% retailers present in 2011. New Delhi ranked as the fourth most popular city for new retail entrants at city level. Retailers are increasingly looking at economies such as India and China, which have the best growth prospects and are least likely to be affected by austerity measures.

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Articles | Economy & Business India to become world's 2nd largest steel producer by 2015 India is expected to become the world's second-largest producer of crude steel by 2015, riding on expansion plans of domestic players like Steel Authority of India (SAIL) and Rashtriya Ispat Nigam (RINL), the government said today. Chairing a meeting of the Parliamentary Consultative Committee, Steel Minister Beni Prasad Verma said annual demand for steel is likely to grow at an average of over 10% in the next five years as compared to 8% growth during 1991-92 and 2010-11. India slipped one rank to become the fourth largest steel producer in 2010, with 68.3 million tonne of output. It produced 63.5 million tonne steel in 2009. China is the number one producer of steel, followed by Japan and the US at second and third places, respectively. "India also maintained its lead position as the world‘s largest producer of direct reduced iron (DRI) or sponge iron," the official statement said, adding the per capita steel consumption during the last six years has risen from 38 kg in 2005-06 to 55 kg in 2010-11. The steel sector contributes nearly 2% of the GDP and employs over 500.000 people. Expressing concerns over exports of iron ore, a fast depleting resource, Verma said iron ore is a non-renewable natural resource and his Ministry is of the view that it should be conserved for longterm utilisation of domestic steel industry. "Our policy should, accordingly, aim at value addition of iron ore within the country instead of exporting iron ore," he said. National

Steel Vision and strategy paper are being finalised for promoting steel sector, he said. The Minister also elaborated on expansion plans of PSUs like SAIL, RINL etc. "The major thrust of the modernisation and expansion plans is to adopt the best modern technology, which in addition to being cost effective should also be energy efficient and environment-friendly," he said. State-run SAIL has undertaken a massive expansion drive to increase its steel production capacity from current 14 million tonne to about 24 million tonne, with an investment of about €10.6 billion.

FDI in Steel sector in India

BRICK INDUSTRY OPTS FOR INNOVATION

The Union Minister of Steel Shri Beni Prasad Verma has said that Foreign Direct Investment (FDI) inflows into the country in the metallurgical sector during the last three financial years is given below, which shows that there is a net increase in foreign direct investment during 2010-11: 2008-09 ($959.94 million), 2009-10 ($419.88 million) and 2010-11 (1098.14 million)

Indian brick makers, a majority of whom are SMEs, are undergoing a complete makeover through the adoption of mechanisation following the entry of international technology providers and producers. Entrepreneurs are also bringing in product innovation.There are about 35 plants across India, including semiautomatic and fully-automatic ones, which are already operational. Many other modern plants are under construction. Analysts believe that increased difficulties in handling labour, maintaining quality and meeting the increased demand for better-quality bricks have forced brick kiln entrepreneurs to rethink their production processes and also led to product innovation. As a result, many entrepreneurs are diversifying into resource efficient bricks (REBs) by importing machinery from overseas. REBs are either perforated or hollow, have better insulation properties, and less energy and resources are consumed in their production.

In a written reply in the Lok Sabha, he said that following are the major investments proposed by foreign steel producers in the Indian steel industry in the last three years: Producer

Proposed State

Proposed Annual Capacity

Posco

Orissa

12 mtpa

Proposed Investment (Rs cr) 52,000

Posco

Karnataka

6 mtpa

32,000

Arcelor-Mittal

Orissa

12 mtpa

40,000

Arcelor-Mittal

Jharkhand

12 mtpa

50,000

Arcelor-Mittal

Karnataka

6 mtpa

30,000

NMDC-Severstal

Karnataka

5 mtpa

Both will invest Rs crore 2300

Tata Steel-Nippon Jharkhand Steel

60,000 tonnes

jointly 9,000

He said, in addition to these, the following are some of the other investments made by foreign investors in the Indian steel industry: Acquisition of 14.99% stake in JSW Steel Ltd by JFE Holdings of Japan Acquisition of 29% stake in Uttam Galva Steels Ltd by Arcelor-Mittal

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In Europe REBs have wide acceptance but in India they are at a nascent stage, though the market for them is growing. At present, they account for less than one per cent of India‘s total brick production. REBs, once adopted, reduce the consumption of top fertile soil by more than 20% , besides lowering energy consumption by 20-30%. The Energy and Resources Institute (TERI) has been working in the brick sector with the objective of improving energy efficiency and reducing CO2 emissions through the promotion of energyefficient technologies and practices. It is involved in implementing a project for promoting energy efficiency in the Indian brick industry, in partnership with the Union ministry of environment and forests.


Economy & Business | Interview Q&A: David Lamb, Managing director, world gold council The World Gold Council (WGC) wants to handle the three ‗I‘s in gold jewellery — intelligence, innovation and image — at a time when gold prices are scaling new heights. The €12 billion Indian gold jewellery market, the largest in the world, however, refuses to slow down despite the price rise. For WGC managing director (jewellery) David Lamb, the challenge lies in hooking a new set of consumers to the yellow metal. Young women, who depend on their mothers to introduce them to gold at their weddings, are the ones who can help drive innovation and the image of gold as well as demand for higher margin jewellery. On their part, jewellers should not wait for their wedding to reach out to them, Lamb tells Sayantani Kar. Q: Gold prices have scaled up rapidly. How will the growth of the gold jewellery market be affected by the rising prices? A: The overall health of the Indian industry is intact. There has been no loss of purchase intent in the market. The Indian market grew by 39.5% last year. Consumers are excited by gold because they believe in its intrinsic value. They know what they are buying outstrips almost any other thing they can spend their money on. This confidence in gold‘s value will prevent the Indian consumer from thinking any less of gold jewellery, price hike or not. This strength is what makes India one of the most strategic markets for us. Contrast that with the US, where the recent price increases have led retailers and consumers in the mass market really to question what gold jewellery is for them. Q: However, the Indian gold jewellery market also operates on low margins compared to other countries. How do you drive growth of brands in a market that is built on small-scale local players? A: The thinness of the margins creates difficulties in the Indian (gold) industry. But as India explores new categories, new forms of competition, new standards of retail, the expectations of service and design will become more dear to consumers. Consumers are always looking to upgrade but in India there is a strong traditional way of buying gold that is at odds. The challenge for the trade here is to find ways of making consumers upgrade. The sheer value of the metal will continue to be spectacular but there will also be new designs and forms of services to make buying more exciting for consumers. We will never move India to the kind of retail margin structures seen elsewhere in the world. But should these parameters improve, then we can increase the margins to a realistic level. Q: What are the new business models that the trade should look at? A: One of the projects that we are looking at now is the world of gold for the younger consumer — 20-27 years of age. A lot of the jewellery trade has its first interaction with the consumer around her wedding — a dynastic introduction when the mother takes you to the family jeweller. But given the demographics of India, there is a huge opportunity to look where gold fits in with the life of a young woman. She does not have her mother‘s extreme value consciousness. The social currency of the brand — how it makes you feel, the reactions you get from your peer group — are more important to her than rupees per gram. Addressing this set will lead to a different value proposition from what we have seen so far. Q: What will be WGC’s role in this? A: I want the WGC to get into the lives and minds of women in their 20s. The jewellery industry here understands what to sell to a

bride. But a younger audience will be tougher. The ticket size and the competitive set will be different. They have a predisposition to gold but haven‘t got the right product yet. This is an area where the diamond industry has been more successful. Their aspirations for design will also lead to better margins. We are actively looking for people who match our ideas to look at commercial partnerships such as brands of our own for big concepts that will lead. We have always had strong relationships with significant B2C (business to consumers) players. In the next five years, we will see those strengthen through commercial partnerships. As manufacturers, we will also help put supply chains in place for new concepts of retail etc. At the same time, we have to enter gold in new forms of conversations such as those on Facebook. The industry needs to appreciate that its next generation of consumers is having conversations about products at a speed and in a format that is far different from the response to a formal piece of advertising. Q: You spoke of big concepts. What will they be like for your youth-centric approach? A: When young women go for indulgent shopping, they don‘t go shopping for fabric, leather or gold. They go shopping for a fantastic saree for an occasion or a handbag to make a statement. Gold as less of an abstract commodity and more of a specific piece for a mood or a part of the body could be a big idea to sell. Stores too have to be designed in a way to talk to a 20-something. Q: Is that the target audience around the world? A: Around the world, business is anchored in what we call the core belief — gold is the metal of love. Central to every market, then, is the role of gold in bridal shopping. Almost 78% of American women wear a gold band while 50% of the second largest gold jewellery market, China, is bridal jewellery. So, the focus will remain on forging marriages in gold. But we are looking at more spontaneous engagements with gold much earlier in the consumer‘s life because luxury purchases are becoming a form of self-identification and aspirational. Q: But won’t the prices be prohibitive for such dabbling? A: They won‘t be in India. In China too, the attitude and pricing are very similar to that in India. The price movement is in fact proof of gold‘s value for the Chinese. But for the third largest market, the US, there is a need to make gold more ‗luxury‘. It has become less accessible to the mass market and hence, will have meaning for the top-end of the consumer market as there are no cultural imperatives of heirlooms being passed on. There women are looking for big statement pieces to justify them as luxury purchases rather than buying an apology of a smaller piece. Q: Do Indian jewellers learn from international trends? A: There is a resistance to international trends. But that is the difference between jewellery and other luxury segments in India. The modern Indian woman still wants jewellery that is culturally relevant. Hence, retailers are interpreting traditional motifs such as the lotus or the peacock in modern design. For exports, Indian players have an advantage. With gold becoming more a premium buy, consumers are looking for a heritage story and exquisite craftsmanship in their jewellery. Indian jewellers have had a level of mastery that lends well to such a demand. Our earlier blinkered approach to gold jewellery has also given way to imagining gold with other materials such as semi-precious stones, again an area where Indian jewellers have always been strong.

October 2011 - India-Austria Newsletter | 9


Industry | Sector Close-Up Tourism and Hospitality Tourism is a significant sector of the Indian economy and contributes significantly to the country‘s gross domestic product (GDP) and foreign exchange earnings (FEE). The Indian tourism sector is also linked with important sectors such as transportation, infrastructure, and handicraft, which further helps in the growth and development of the country. The Ministry of Tourism has made various efforts to expand the tourism infrastructure at various destinations in India. These efforts are a judicious blend of traditions, legacy, religion and eco-tourism projects that intend to offer the tourists a holistic experience. India currently holds the 12th position in Asia and 68th position in the list of overall in the list of the world's most attractive tourist destinations, as per the Travel and Tourism Competitiveness Report 2011 by the World Economic Forum (WEF). The increasing numbers of both domestic as well as international tourists have been very encouraging for the Indian travel and hospitality sector which has nearly doubled during the last three years. The tourism and hospitality industry experienced a healthy growth trend of 24.6% during 2009-2010 as compared to 2008-2009. The total number of foreign tourists in the country in 2010 was 5.58 million compared to 5.17 million in 2009 - a rise of 8.1%, according to the Market Research Division of the Ministry of Tourism. Growth Trends Tourism and hospitality being the largest service sector in the country, contributes around 6.23% to the national GDP and 8.78% of the total employment in the country. The country welcomes around 6 million international visitors every year and nearly 562 million domestic tourists. The Union Ministry of Tourism compiles a monthly estimate on the foreign tourist arrivals (FTAs) and foreign exchange earnings (FEE) based on the total number of foreign visitors in the country. The important trends in the sector for June 2011 based on the report by the Ministry of Tourism are as follows: The total number of tourists visiting the country during June 2011 were 0.39 million as compared to 0.37 million during June 2010 and 0.352 million in June 2009. A growth of 7.2% has been registered during June 2011 as compared to 4.9% growth in June 2010. Also, the 7.2% growth rate in June 2011 was higher than the observed growth rate of 7.0% in May 2011.

of June 2010 and US$ 796 million in June 2009. The growth rate in FEE in June 2011 over June 2010 was 18.9% as compared to the growth of 28.1% in June 2010 over June 2009. FEE from tourism during January-June 2011 were US$ 7,811 million with a growth of 14.2 per cent, as compared to US$ 6,842 million, with a growth of 36.6% during January-June 2010, over the same period of 2009. Government Initiatives The Government has allowed 100% foreign investment under the automatic route in the hotel and tourism related industry, according to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and Industry, Government of India. The terms hotel includes restaurants, beach resorts and other tourism complexes providing accommodation and /or catering and food facilities. The term tourism-related industry includes: Travel agencies, tour operating agencies and tourist transport operating agencies Units providing facilities for cultural, adventure and wildlife experience to tourists Surface, air and water transport facilities for tourists Convention/seminar units and organisations The Government of India has announced a scheme of granting Tourist Visa on Arrival (T-VoA) for the citizens of Finland, Japan, Luxembourg, New Zealand and Singapore. The scheme is valid for citizens of the above mentioned countries planning to visit India on single entry strictly for the purpose of tourism and for a short period of upto a maximum of 30 days. The government has taken up a number of initiatives to enhance the tourism and hospitality sector performance and profits. Identification and development of 37 destinations within the last two years, and execution of 600 projects for 300 tourist spots across the country with an investment of over US$24 million are some projects taken by the Government to boost the travel industry and create awareness for the sector. These efforts have been coupled with monetary assistance from the Central government to the tune of US$ 5 million and US$ 10 million, as per the Tourism report by the Gujarat Government.

FTAs during the period January-June 2011 were 2.91 million with a growth of 10.9% as compared to the FTAs of 2.63 million with a growth of 8.9% during January-June 2010 over the corresponding period of 2009.

The Ministry of Tourism under the Marketing Development Assistance (MDA) Scheme has also set up committees to assist and motivate travel tour operators and help them to familiarise with international standards of hospitality. Also, the Government provides financial assistance to travel agents to participate in travel marts and annual conventions for travel and tourism, as per the Annual report by the Ministry of Tourism.

FEE during the month of June 2011 were US$ 1,213 million as compared to FEE of US$ 1,020 million during the month

The Uttarakhand State Government has launched 100% tax exemption program to exempt multiplex projects, amusement parks,

10 | October 2011 - India-Austria Newsletter


Sector Close-Up | Industry Tourism and Hospitality (cont‘d) and other tourist facilities for a period of five years under the Vision 2020 document. On the same lines, Rajasthan has reduced the luxury tax level to 8% from the existing 10% levels. Kerala, Madhya Pradesh, Orissa and Gujarat have entered into Private Public Partnerships (PPP) to promote travel and tourism to attract tourists. According to the Eleventh Five Year Plan, a total of US$472 billion is planned to be invested in upgrading and modernising civil amenities like bridges, ropeways, roads, telecom services, ports, and other forms of transport as per a report by the Planning Commission. Industry Initiatives The Indian hospitality sector is expected to see an estimated investment of US$ 12 billion in the next 2 years, and various new industry initiatives are being taken up. Given the current growth, demand-supply gap and investment norms (100% FDI allowed), the country provides opportunities for International brands to enter India with a long term commitment as stated in a report by the ministry of external affairs. Medical Tourism India has emerged as the major destination for medical tourists from across the globe. Lower costs combined with effective healthcare therapies have attracted a number of foreign patients. The Indian medical tourism sector valued at US$ 310 million, currently, receives more than 100,000 foreign patients each year and is expected to reach US$ 2 billion by 2012. With an annual growth of the sector projected at 30 per cent, the number of medical tourists is anticipated to grow at a CAGR of over 19% during the forecast period to reach 1.3 million by 2013. To offer superior healthcare services, the government has adopted the Public Private Partnership (PPP) Model to enhance the infrastructure requirements of the sector with the expertise of private sector and better support of public sector.

tributes 2.2% of India‘s GDP. The sector is expected to grow to US$ 36 billion by the end of 2018. Seventy% of the total contribution (US$ 11.85 billion) comes from the unorganized sector and the remaining 30% (estimated at US$ 5.08 billion) comes from the organised sector of the hospitality industry. The industry also witnessed an increase in the number of hotel rooms with a growth of 5% during the last three to four years. In the next two tears, a total investment of US$ 12.17 billion is expected that will add over 20 new international brands in the hospitality sector. Rise of budget hotels in the country, such as Ginger Hotels, Lemon Tree, Sarovar Hotels, Fortune Hotels, Ibis and Choice Hotels clearly suggest a huge growth potential in the sector. Among the recent initiatives within the industry, some are listed below. US-based casual dining restaurant chain California Pizza Kitchen (CPK), is bullish about Indian market and under its expansion plans, the company has recently announced the launch of its new outlet here, which is counted as its third restaurant in India. Whitbread, UK-based hospitality company, has announced to invest US$ 53.3 million in the country by year 2020. With this investment amount, the company is planning to launch over 80 properties in the country over next ten years. Restaurant chain Lite Bite Foods, is looking to spread its wings globally through franchise route. With its expansion plans, the company is aiming to increase its outlets count to 200 from the present 50 outlets across the country over the next three years. Starwood Hotels & Resorts Worldwide has announced its expansion plans for India. The company is looking to operate 50 hotels in India by the end of 2012. Under its strategic plans, the company is targeting the Indian market to enhance its business and in the same move the company has launched the Starwood India Customer Contact Centre (CCC) in Gurgaon. Road Ahead

Kerala, termed as ‗God‘s Own Country‘ promises world class hospitals coupled with cost-effective treatments and opportunities for tourists to relax and enjoy. The state has been witnessing a steady growth in the number of foreign nationals visiting the country for procedures like knee replacement, weight reduction surgery, liver transplant, cardiac care, ophthalmic care and dentistry.

The tourism and hospitality sector report by the Ministry of Tourism suggests that the demands are expected to increase up to US$ 34.7 billion by the end of 2020. In order to promote this target, the Ministry has already sanctioned the development of 169 rural sites across the country. These sites have been selected based upon their competencies for craft and handloom skills.

Additionally, the Ministry of Tourism is aiming at leveraging India's potential in conventional systems of wellness and medicines, such as Ayurveda, Siddha, and Yoga. The prominent American Association of Physicians of Indian Origin (AAPI) has acknowledged Jaipur as the center of medical tourism.

Statistics suggest a triple fold increase in the number of tourists visiting the country. The sector has witnessed a steady growth from four million travelers in 1998 to 11 million in 2008. As expected, the figure in intended to reach a mark of 29 million visitors by 2018. There is an opportunity in the inbound MICE sector (meetings, incentives, conventions and events) which has already registered a growth of 15% to 20% during the last five years as stated in the report by the Ministry of Tourism.

Hospitality The Indian Hospitality industry, estimated at US$ 17 billion, con-

October 2011 - India-Austria Newsletter | 11


Industry | Profile BIG player: Mahindra Holidays and Resorts India Ltd. such as restaurants, ayurvedic spas, kids clubs and a variety of holiday activities. They seek to be the preferred partner to the urban family for family holidays and holiday services in India. It is their vision to be the number one family holiday provider in their target markets by consistently delivering attractive resort destinations, innovative offerings and service excellence, not only during the holiday but also throughout the membership period.

Mahindra Holidays & Resorts India Limited is part of the USD 7.1 billion multinational Mahindra Group. With over 112, 000 employees in 79 countries across the globe, the Group is also among India‘s top ten Industrial Houses. The Group has interests in aerospace, aftermarket, agribusiness, automotive, components, consulting services, defense, energy, farm equipment, finance and insurance, industrial equipment, information technology, leisure and hospitality, logistics, real estate, retail, and two wheelers. Mahindra Holidays & Resorts India Ltd., (MHRIL) is a part of the Infrastructure & Realty Sector of the Mahindra Group and brings to the industry values such as Reliability, Trust and Customer Satisfaction. Started in 1996, the company‘s flagship brand ‗Club Mahindra Holidays‘, today has a fast growing customer base of over 100,000 members and 27 beautiful resorts at some of the most exotic locations in India and abroad. Over the last decade, MHRIL has established itself as a market leader in the family holidays business. The company has followed a two pronged strategy – rapidly increasing its bouquet of resorts to provide more variety in holidaying options and enhancing its service levels to its members to provide delight at every point of interaction. All MHRIL resorts are totally geared to cater to a variety of holiday needs and experiences in all areas of operation, from housekeeping to food & beverage to holiday activities. Creating and managing the holiday experience is a core strength. Mahindra Holidays and Resorts India Ltd. is one of the leading leisure hospitality providers in India, offering quality family holidays with a range of services designed to meet the diverse holiday needs and interests of a family. They provide family holidays primarily through vacation ownership memberships. Their members can choose to stay and holiday at resorts in a range of holiday destinations for a pre-determined number of days in a year for a fixed number of years. The resorts offer the use of furnished accommodation, such as apartments and cottages, and an experience through resort specific amenities and facilities,

As part of their growth strategy, they have also diversified the portfolio by introducing new vacation ownership offerings, Zest and Club Mahindra Fundays, Mahindra Homestays and travel and holiday related services through clubmahindra.travel. Club Mahindra Holiday membership currently entitles members the choice of holidaying at any of their resorts, for seven days each year, in a season and apartment type of their choice, for 25 years. The members also have the option of choosing to holiday outside their season and apartment of their entitlement by using an exchange program. There is further flexibility accorded to their members in being able to bring or carry forward their annual entitlement, subject to certain limits. In addition, their members can choose to access a range of resorts globally through our RCI affiliation. The timeshare holiday major has acquired Bon Alpina hotel in Innsbruck, Austria for a sum of €3.7 million. The resort, which is a venue for Olympic skiing thrice, was acquired recently.  Club Mahindra will spend additional €1.8 million to renovate and upgrade the the resort. The resort is a profit-making property and the company will set aside 10-rooms for its timeshare members. The rest of the inventory will be used as a regular hotel, source said. Noting that the leisure industry is growing a compounded annual growth rate of 50%, a source said Club Mahindra will be targeting Indian diaspora and Europeans as its clientele apart from its regular timeshare member wanting to try exotic locales. "The company is just tailoring its products to suit the changing demographic profile," the source said. It had earlier entered into alliances with other resorts for utilisation of space and has already an RCI resort in Thailand. It is looking for a similar arrangement in Malaysia. With sales offices in Dubai and Kuwait, the vacation ownership company is also looking at setting up resorts in Sri Lanka and Maldives, the source added. Known for launching unique marketing initiatives, the company is now leveraging the mall culture and has set up 'Holiday World' in leading retail venues as part of its experiential concept marketing.

12 | October 2011 - India-Austria Newsletter


Trade Shows | Industry Upcoming trade shows in india WHAT An International Trade Expo that offers Industry, Entrepreneurs & Corporate to showcase their vast potential.

WHEN December 1-5, 2011 WHERE Amritsar, Punjab

WHAT International Technical conference and Exhibition on Pulp, Paper, Conversion and Allied Industry WHEN December 10-13, 2011

WHAT The world's largest electrical Transmission and Distribution exhibition

WHEN January 18-22, 2012 WHERE Mumbai, India

emerging companies. WHAT The Trade fair targets WHEN WHEN those who are working with November 14-27, 2011 WHAT February 25-March 4, 2012 Handicrafts, Art and craft WHERE The largest and most prestigious Book as exporters, Importes, Fair in the Afro-Asian region New Delhi WHERE Processors, Manufacturers, MORE INFO New Delhi, India Distributors and many www.indiatradefair.com

MORE INFO www.pitex.co.in/

WHERE New Delhi MORE INFO www.paperex-india.com

MORE INFO www.elecrama.com

MORE INFO www.nbtindia.org.in

October 2011 - India-Austria Newsletter | 13


Tourism | State Profile Jammu and Kashmir Jammu and Kashmir, India‘s fascinating northernmost state consists of three regions differing in topography and culture. Jammu was the stronghold of Hindu Dogra kings and abounds with popular temples and secluded forest retreats. Kashmir‘s capital city, Srinagar offers delightful holidays on the lakes with their shikaras and houseboats. Ladakh is the northern most province of the state, with a bleak terrain of barren mountains. Hilltop monasteries and a colourful way of life, completely at one with the surroundings, make Ladakh one of the best living traditions of Tibetan Buddhism in the world today.

Fishermen in Dal Lake, Srinagar

Amongst the three regions of Jammu & Kashmir State, Jammu, perhaps, offers the widest diversity of terrain and beauty. The entire region is pocketed with lakes and valleys, some still little explored. The foundation of the settlement of Jammu is attributed to King Jambulochan of the 9th century BC. In 1730 AD, it came under the Dogra rule of Raja Dhruv Deva and Jammu became an important centre for arts and culture, now renowned as the Pahari School. Religion, too, played an important part in its development, so beautifully evidenced in its various shrines and temples spread throughout the region

Bhadarwah Valley, Jammu

Some of Jammu and Kashmir’s major attractions are:

Pahalgam, Village of Shepherds

Terraced Nishat Garden, Srinagar

Tso Moriri lake Ladakh Leh Town

IndiaTourism Frankfurt

Baseler Str. 48 / D-60329 Frankfurt Tel: +49 (69) 242949-0 / Fax: +49 (69) 242949-77 www.india-tourism.com / info@india-tourism.com

14 | October 2011 - India-Austria Newsletter


India in Austria | Miscellaneous agenda

Charity for blind children

Qawwali-Ensemble

K3 goes India

Indian dance evening

“Neelay Khan”

Jazz-Ethno LiveSounds

15 October, 18:30

20 October, 19:30

20 October, 20:30

Museum für Völkerkunde, Vienna

Radiokulturhaus, Vienna

ARGE Altes Kino, Landeck

More information with at

21 October, 20:30

More details ar altes-kino.jimdo.com

0699/120 303 20

Gasthaus Penkner, Steinbach

21 October, 20:00

More details at salam-orient.at

Jazzit:Musik:Club, Salzburg More details at jazzit.at 22 October, 20:00 Holzhackerstube Peter Pichler, Rohrmoos-Fastenberg More details at holzhacker.net 23 October, 13:00 FILMCASINO, Vienna

Film und Indien

Ethno Dance Competition

in Graz

“Feet of the world”

17-22 October

23 October, 10:00

KIZ Royal Kino, Graz

TaO! Theater am Ortweinplatz, Graz

Programme details under

More Info: 0699/10 25 99 61

indiasphere.at

or www.indiasphere.at

More details at salam-orient.at

Pinzgau meets India

Tanzshow

Workshops

“von Bombay Nach kairo”

Indische Rhythmen & Tanz

For twelve whole days, the Wellness hotel Krallerhof in Leogang will be focusing on Ayurveda, Indian artists, typical Indian products and foods, Indian cuisine and the multifaceted fascination India exudes. One of the highlights of ― Pinzgau meets India" is the traditional charity evening with Ö3 radio star Claudia Stöckl in aid of street children in India.

18 October, 19:30

October 24-25

28 October, 19:00

Theater Akzent Vienna

Kunstuniversität, Graz

Wellness hotel Krallerhof

More details at salam-orient.at

Programme details under

More details at

indiasphere.at

www.krallerhof.com

October 2011 - India-Austria Newsletter | 15


Miscellaneous | India in Austria Agenda Diwali Fest Galaabend 26 October, 17:00 Orpheum, Graz More info at indiasphere.at

Diwali, The festival of lights 26 October, 19:30 Theater am Spittelberg, Vienna More info at austro-indian.at

Gypsy Spirit – Live on Tour India express 2 November, 20:00 Wiener Metropol, Vienna More details at salam-orient.at

Talk-Series "Zu Gast bei Elisabeth Al-Himrani" October 20, 19:00 No. 79 - Prof. Mag. Marialena Fernandes, Pianist Hochhaus Herrengasse 6-8/1/10/57 More details at austro-indian.at

Lecture: India - The Stirring Elephant by T.P. Sreenivasan, former Ambassador of India October 21, 15:00

The 3rd Annual Webster University / Austro-American Society „Distinguished Speakers Series“

Institute for South Asian, Tibetan and Buddhist Studies, Spitalgasse 2, Hof 2.7 , Seminar Room 1

Mindpower Show - Explore the unexplored mind power This interactive mind opening show by Ms. Kruti Parekh helps people to go beyond the logical of daily life and get to know the power of the mind. October 31, 09:00 Tourismusschulen Modul More details at krutiparekh.com

with a talk by

H.E. Ambassador Dinkar Khullar Ambassador of India to Austria on

“INDIA IN THE WORLD ECONOMY-CONTEMPORARY SITUATION AND PROJECTIONS FOR THE FUTURE” Date: October 17th, 2011—18:30 Venue: Clubrooms of the Austro-American Society 1010 Wien, Satallburggasse 2 (Mezzanin) Registrations by Fax 513 9123, email auamsoc@aon.at or by post to Austro-American Society 1010 Wien Stallburggasse 2

16 | October 2011 - India-Austria Newsletter

India Newsletter 10.2011  

India Newsletter published by the commercial section at the Indian Embassy in Vienna

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