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CONTENTS ewsletter N March 2005

The Union Budget 1 FDI in Construction Sector 3 Welcome… FDI Limit in Telecom Raised 3 ... to the first edition of our on-line newsletter, which will be sent to all our members by e-mail every month. It is closely linked to our new website, www.indiaitaly.com, and is intended to keep members abreast of the latest Italian Language Course 3 news of interest to Chamber members – more detailed accounts and articles of general interest will continue to be featured in our quarterly journal, Italian President Ciampi in Italian-Links. India 4 The Newsletter is also an excellent way of advertising your products and services, as it reaches an assured audience of like-minded business interests Italian Companies to – check out our very favourable rates. Strengthen Indian Presence6 Do let us know your views about the Newsletter: we would be very happy to have your opinions, suggestions and contributions. . Roman Holiday for Indian Please write to us at: [email protected] Cinema 6

Spinning Magic 6

Italian Clothing Company Chooses India over China 6 Indian Share in Textile Global THE UNION BUDGET 2005–2006 Market in Danger 7 P C Chidambaram, Finance Minister of India, presented the first full Videocon to buy Italian tubes Union Budget of the National Democratic Alliance (NDA) Government on 28 February. An interim budget was presented in July last year, after the unit 7 election of the new government. Overall the budget fell in with expectations, given the role of left wing parties in the coalition government, fiscal restraints India best location for and the Government's commitment to growth. offshoring 8 The Budget aims for a growth rate of 7%, keeping inflation at 4.55%. Growth will be driven by corporate investment, along with improvement in foreign New Members 9 direct investment (FDI) inflows, supportive policies, a revival in the rural sector and export expansion helped by the removal of trade barriers – principally textile quotas. Interest rates are also likely to be kept in check, given the low Singapore Convention 9 forecast for inflation. Fiscal deficit, however, is still high, targeted at – 4.4% of GDP and the high public debt that this reflects will act as a deterrent for higher credit ratings for India. Business Enquiries – India 10 In general, the Budget focuses on agriculture and rural development, employment generation in the rural, textiles, SME and irrigation sectors and infrastructure. Corporate tax is reduced from 35% to 30%, with a surcharge of 10% that translates into a 3% lower tax burden for corporates. This should result in better cash flow and greater funds for investments. Customs duty is The Indo-Italian Chamber of Commerce & Industry reduced from 20% to 15%, while duty on crude oil imports is down from 502 Bengal Chemicals Compound 10% to 5%. Veer Savarkar Marg Prabhadevi continued on pg 2 Mumbai 400 0025 e

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A FEW HIGHLIGHTS l Customs duty on optical fibres/bundles and optical fibre cables reduced from 20% to 10% to benefit long distance l GDP growth: 7-8 % telephony service providers l Inflation: 4-5 % (5.01 % week ended 12 Febuary) l Focus on infrastructure and rural sectors Automobiles/Auto-ancillaries l Deficit: 4.3 % of GDP, down from 4.5 % in previous year l Reduction on excise duty of tyres from 24 % to 16 % l Forex reserves: $132.96 billion (Record foreign exchange l Excise duty of 16 % is imposed on road tractors of engine reserves can be used to fund domestic infrastructure capacity more than 1,800 cc projects.) l Tractor manufacturers will benefit from the additional 100,000 l No increase in FDI limits, but pension funds, retail and mining hectares to be brought under irrigation will be reviewed. l Hike in excise duty of steel from 12 % to 16 % l No target for sales of stakes in government firms, unlike l Customs duty on second-hand cars and motorcycles reduced previous year from 105 % to 100 %. Duty on specified parts of battery l Defence spending: 830.00 billion rupees operated road vehicles reduced from 20 % to 10 % l Rs 93.2 billion for highways l Customs duty on lead cut from 15 % to 5 %, on articles of lead Service tax remains at 10 %; more services to be taxed l from 20 % to 10 % and on battery separators from 20 % to 5 %. l Rs 11 billion to expand electricity in rural areas l Reduction in customs duty on petrol and diesel from 15 % to l Emphasis on investment in airports and tourism l Peak customs duty on non-farm products cut to 15% 10 %: however, Re 0.5 increase in cess on petrol and diesel from 20% from Re 1.5 to Rs 2 per litre in VAT will have a positive impact l VAT throughout India from April 1 on the automobile sector. l Corporate tax down by about 3% l Lowering of the corporate tax rate to 30 % (+ 10 % surcharge) l Securities transaction tax increased to 0.02 % from 0.015 % will mostly be offset by reduction in depreciation rates from 25 l Customs duty on crude oil cut to 5 % from 10 %. No duty on % to 15 % for plant and machinery. cooking gas and kerosene. l Duty on petrol and diesel cut to 10 % from 20 % and 15 % Consumer Durables respectively. l Excise duty on air conditioners reduced from 24 % to 16 % l Personal income tax to apply from Rs 100,000 per year; 30 % l Lower import duty on CPT to benefit television manufacturers tax above Rs 250,000 FMCG sector l No change in small savings interest rate l Customs duty on certain machinery used in leather and l Mutual funds allowed to introduce gold exchange traded footwear industry reduced from 20 % to 5 %. Customs duty on funds. ethyl vinyl acetate, reduced from 20 % to 10 % l Additional excise duty on cigarettes ranging from Re 0.15 to SECTORAL SURVEY Re 0.30 per cigarette based on its length; surcharge of 10 % Pharmaceuticals on excise payable on pan masala, and specified tobacco The reduction in the corporate tax rate will have a positive l products impact for high tax paying pharma companies. l Removal of Additional Excise Duty of Re1 per kg on tea l Customs duty on certain specified machinery in pharma and l Customs duty on molasses reduced from 20% to 10%. biotechnology sector is reduced to 5 % Excise duty on molasses increased from Rs 500/ton to Weighted deduction of 150 % of expenditure on in-house R&D l Rs 1,000/ton facilities of companies engaged in biotechnology and l Cut in peak import duty to 15 % will reduce costs of raw pharmaceuticals industry extended to 31 March 2007 materials LAB, soda ash, etc l Deduction of 100% on profits of companies conducting l Excise duty on matches made by mechanised and semi- scientific R&D and approved by the Department of Scientific mechanised sectors, reduced from 16% to 12%. No duty on and Industrial Research hand made matches l Rs1.5 bn for R&D in pharma sector l Excise duty of 2% imposed on branded jewellery l Cut in peak import duty positive for paints industry which Textiles procures at import parity prices a large part of its raw materials. l Investment in textile sector to be increased from Rs 200 bn in FY05 to Rs 300 bn in FY06. The interest cost will be reduced. Capital goods l Capital subsidy scheme for textile sector l Increased investments in infrastructure to benefit engineering l Reduction in customs duty on import of textile machinery from companies 20% to 10%. customs duty on polyester, nylon, fabrics and l Thrust on rural electrification to benefit power ancillary garments reduced from 15 % to 10 % companies l Excise duty on polyester filament yarn (PFY) reduced from 24 % to 16 % l Excise duty on iron and steel hiked from 12 % to 16 % to have l Clustered development approach to the production and a negative impact on the margins of engineering companies marketing of handloom products; 20 clusters to be taken up in l Net effect in reduction of corporate tax is 33.7 % the first phase l Depreciation rate on plant and machinery reduced from 2 5% l Nearly 30 textile items dereserved to 15 %, negative for companies having major capex plans. Telecom Metals l A provision of Rs 12 bn towards fund for connectivity in l Thrust on infrastructure: building roads, ports, airports, rural and remote areas rails, etc, to benefit all steel companies l 1,687 subdivisions to get support for rural household l customs duty on aluminium, copper and zinc reduced from telephones 15% to 10 % l BSNL to provide public telephones in the next three l Excise duty on steel increased from 12 % to 16 % years to 66,822 revenue villages l Reduction in basic corporate income tax rate to 30 % should l Tax Holiday under section 80 IA extended benefit all steel companies.

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IT l Customs duty exemption on imports inputs required for ITALIAN LANGUAGE COURSE manufacturing computers but a CVD of 4 % levied on their Second Level – Mornings imports l IT software imports to be exempt from the proposed CVD of From: 26 April 2005 4 % For: 3 months l Reduction in basic corporate income tax rate to 30% will not At: Indo-Italian Chamaber of Commerce have any impact on software and hardware 502, Bengal Chemicals Compound V Savarkar Marg, Prabhadevi Oil and Gas Industry Mumbai - 400025 l Customs duty on crude oil reduced from 10% to 5% l Both customs duties and excise duties on LPG and SKO brought down to nil For more information, contact: [email protected] l Service tax being levied on pipeline services Tel: 2436 8186 x103

FDI IN CONSTRUCTION SECTOR

In line with its strategy of introducing developed within three years of the first till now was capped at 49% but with certain reforms outside the Budget exercise, the parcel of land being handed over. The sale security conditions. Communications Government has cleared a proposal for of undeveloped plots will not be allowed. Minister Dayanidhi Maran believes that this 100% FDI in construction and development alone will result in a 20% jump in foreign projects. Though foreign direct investment While the move means that FDI projects investments in the telecom sector within the was permitted in this sector, till now it had to will now get the same treatment as locally- next two years from the current Rs 100 bn. be routed through the Foreign Investment developed ones,foreign involvement will Almost every private telecom company will Promotion Board (FIPB). Now, it can take not displace or replace the local investor gain from this. But the biggest winners are the automatic route. The Cabinet has also but will help the sector grow. The move will likely to be the listed private telecom decided to relax some of the conditions that create employment not only for labourers companies, especially Bharti Televentures, made the exercise unrealistic. The Left had and technicians but also for engineers, which has its network across the country, some reservations on allowing FDI in this architects and designers. since foreign investors are likely to go with listed companies first. sector, but the Government seems to have The government also expects spin-off made an effort to accommodate its concerns. benefits to construction material industries, The Cabinet's decision is accompanied by The proposal bars sale of undeveloped such as cement, steel and brick-making. specific security safeguards. Companies will land by foreign investors so that it does not need clearance from the Foreign Investment become an exercise in speculation. The Before wholly-owned foreign subsidiaries Promotion Board before they can go beyond foreign investors will also have to abide by can enter into such projects, they will the 49% FDI cap. It will then be the state government rules and by-laws. require a minimum capitalisation of $10 company's responsibility to prove to the In the residential segment, 100% FDI was million. In the case of joint ventures with allowed in townships with a minimum land government every six months that it hasn't Indian partners, the capitalisation norm will crossed the 74% limit. The company will area of 10 hectares or 25 acres. Till now, the be relaxed to $5 million. The funds will have minimum area had been pegged at 100 acres. have to ensure that its foreign investors don't to be brought into the country within six have access to technical information. Its months of a company starting business here. On the Fast Track Chairman, CEO, Chief Technical Officer and the majority of its board members must be !100% FDI through automatic route instead resident Indian citizens. Indian security of going through FIPB agencies must be given blanket access to !Minimum land area requirement in all traffic. If any of these conditions is residential sector cut from 100 acres to 25 violated, the companies will automatically be acres FDI LIMIT IN TELECOM ! terminated. The government says such Minimum area for commercial RAISED safeguards are essential to make sure developments pegged at 50,000 sq m ! India's security is not compromised. But the Sale of undeveloped plots by foreign Sending strong reform signals to foreign Left, which has consistently opposed hiking investors not allowed investors, the government has hiked the FDI limit in telecom and raised most of foreign direct investment (FDI) limit in the the security issues, says it wasn't consulted In the case of commercial construction- telecom sector to 74%. The move could before the decision was announced. The development projects, like building of lead to a huge expansion of the sector. government, however, believes it is doing shopping malls or hotels, a minimum of India's telecom companies can now ring in the right thing, as increasing FDI will help 50,000 sq m would have to be built under even more foreign money to boost their widen the network of telephones across the each project. investments. Seventy four% of the total country. It will also send the right signal to equity of an Indian telecom company can the international community that India is At least 50% of the project must be be now owned by foreign investors, which serious about its commitment to reforms. 3 e

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ITALIAN PRESIDENT CIAMPI IN INDIA

The President of Italy, H E Carlo Azeglio Ciampi, made a To coincide with the President's visit, an Italy–India Business Week, state visit to India from 12–16 February, bringing with him a 'Italy & India 2005', was organised at Pragati Maidan, Delhi, from high-powered delegation of ministers and top 1318 February, by ICE (the Italian Trade Commission) and businessmen, representing Italian industry. Accompanying Confindustria, with the aim of presenting the best of the Made in the President were the Vice President and Minister for Italy brand to India. The Indo-Italian Chamber of commerce was Foreign Affairs, ; the Minister of Education represented at the fair with a dedicated stall. The Chamber also and Scientific Research, ; the Minister of organised and coordinated the activities of several Italian Productive Activity, Antonio Marzano; the Minister for agencies with which it has close ties. It set up business meetings Culture, ; the Minister for the Environment, for a delegation from Vicenza Qualità in Delhi; for a business ; and the Undersecretary of Foreign Affairs, multisector delegation from PROMOS in both Delhi and Mumbai, Margherita Boniver. The importance given to the visit by the and even Chennai; organised a seminar for Fiera Milano and Italian Government was reflected not only in the top level coordinated an exhibition on Italian furniture design for Regione Lombardia. The Chamber represents all these agencies in India, and even extended its services to Regione Campania.

Lombardia The Region of Lomabrdy, in collaboration with Promos (the external agency of the Milan Chamber of Commerce), brought a multi-sectoral Business Delegation Delhi, Mumbai and Chennai from 12 19 February, as part of the Italian President's visit. From left: Luca di Montezemolo; Onkar S Kanwar, The Chamber's Promos desk in Mumbai had organised posters President, FIICCI; Kamal and catalogues to promote the the Regione Lomabrdia's stand Nath; the Italian President; Antonio featuring Furniture Design from Lombardy. The desk also organised Marzano; Sunil Munjal, business meetings for 18 Italian businesses, who were interested President, CII in meeting their Indian coutnerparts. In all, the business meetings went very well, with 160 organised in Delhi and 165 in Mumbai. ministerial delegation but also the captains of Italian industry who took the opportunity to address their Indian counterparts at the Business Forum held at the Pragati Maidan fair grounds in New Delhi on 15 February. Among them were Beniamino Quintieri, President of ICE; Maurizio Sella, President of ABI; Luca di Montezemolo, President of Confindustria; Pasquale Pistorio, Vice President, Confindustria and President & CEO ST Microelectronics; and Professor Roberto Massini from the University of Parma.

It's been ten years since the last Presidential visit from Italy when Oscar Luigi Scalfaro came in 1995, and as President Ciampi remarked when he addressed the Business Forum, the increase in bilateral trade within the past two years was not enough and Italy had to roll up its sleeves to make up Winston Periera (left) for lost ground. There was no time to be lost. Despite a with delegates commercial and industrial presence in India, Italy was lagging behind. Bilateral trade had increased by 21% in the Fiera Milano first nine months of 2004, confirming the trend set during the fiscal year March 20032004, when it was 2.7 billion US Fiera Milano SpA came to India as part of the Italian Presidential dollars, in itself an increase of 28% over the same period in Business Delegation to meet potential companies, institutional the preceding year. bodies and government authorities, and to promote its new This was in part exhibition centre. The first European owing to the fact that fairground to be listed, Fiera Milano Italian companies SpA is working on alliances with Indian had focused above exhibition organisers to introduce new all on small and exhibitions to the Indian market and medium sized Indian construct new fair grounds in India. enterprises, but also It hopes to collaborate with Indian because of changes exhibitions on modifying and in Indian society, upgrading existing exhibitions and where the growth in fair grounds in India to match the economy had international standards and on bringing favoured the emergence of a fast Andrea Bonardi, Secretary General, at the Indo- growing middle Italian Chamber stall class. e

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international exhibitions to India, in partnership with major Indian research & R&D. The delegation from Campania, headed by the fair ground organisers. Mr Gianfranco Alois, Regional Minister for Trade and Industry, Campania, called upon Mr E At a presentation on 16 V K S Elangovan, Minister of February, Dr Michele Perini, state for Commerce and Chairman, Fiera Milano, Industry to discuss various spoke about the wide array trade and investment related of facilities, technology and issues. Both the ministers services of the new, vastly- agreed on sending high-level upgraded state-of-the-art trade delegations from their exhibition centre in Milan. countries to explore trade and The fairground and exhibition investment opportunities in centre is located in the Campania and India. middle of Lombardy – one of the richest and most The delegation also met and dynamic regions in Europe. held discussions with senior It is a prestigious setting, officials from the Indian Space strategically located in terms Research Organisation (ISRO), of its international Software Technology Park of accessibility and the India (STPI), Indian Institute of economic importance of the Technology (IIT) Delhi and surrounding area. various other institutions and bodies to promote R&D, trade Forthcoming attractions for and commerce. Indian trade and industry at Furniture exhibition at the Regione Fiera Milano include: Lombardia stall As part of this trade promotion, a seminar on the Region of Campania and the opportunities it offers was held in New Delhi on MICAM an international 16 February. The delegation at the seminar consisted of four shoe show important associations representing their members from MIPEL a leather bag show clothing/textiles and accessories, ICT district, Aerospace and the Jewellery sector, who later held one to one meetings with SALONE DEL MOBILE the #1 international furniture show in interested Indian companies.A focused delegation of Indian textile the world manufacturers and bureaucrats will visit Campania shortly to EURO LUCE the world famous lighting products show explore opportunities in the textile clusters in this region. An Italian MIDO an international ophthalmology show delegation will also visit India for bilateral cooperation. They will CHIBI MART one of the largest handicrafts and costume focus on the textile cluster in India, such as Tirupur. Campania has jewellery shows also welcomed Indian companies to look at its Agro food cluster.

For information on the web, visit www.fieramilano.it or contact: Tech Napoli, the Science & Technology Park in Naples, has invited Indian companies to invest in Campania and work on JVs in R&D. [email protected] Campania is the one of the most industrialised regions in Italy. Campania The industries present here are iron metallurgy, heavy mechanics, Italy's prosperous Campania region is keenly looking at forging petrol, cement, electrical, chemicals, clothing, electronics and alliances with Indian companies, institutions, and government for mechanics (FIAT). Artisan activities include coral and cameo promoting textiles, agro food, information technology, space manufacture, leather goods and ceramics.

Michele Perini The Campania seminar

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ITALIAN COMPANIES TO multinationals looking for greenfield garments reformed India's textile industry STRENGTHEN INDIAN investments through wholly owned arms. largely in terms of better technology and Most of our companies look for a local production techniques. The recent PRESENCE partner,” Quintieri said. announcement of Rs 20,000-crore (Rs 20 billion) package by the textile minister for the An avalanche of medium-sized Italian technical upgradation of the industry has manufacturing companies have either Financial Express come as an added bonus for the sector, firmed up plans to substantially augment which is on a comeback trail. their presence in India or are looking at the debutant equity investments, mostly in joint While bigger players in this sector like ventures with Indian firms. ROMAN HOLIDAY FOR Raymonds and Arvind Mills have been INDIAN CINEMA aggressively expanding their business and Italian president Carlo Azeglio Ciampi, who planning for increased exports, a number of led a high-level government-industry-trade multinational retail companies like JC Indian cinema can go to , and Rome delegation to India in mid-February, took up Penney, Gap, Marks & Spencer, Nike, Lee, can woo India, after a high-powered a host of specific investment proposals by Tommy Hilfiger and Wal-Mart are joining the delegation led by President Carlos Azeglio Italian companies with the newly formed fray for outsourcing products from India. The Ciampi, came to town in early February, to Investment Commission headed by Ratan textiles sector contributes significantly to ink a co-production treaty to produce and Tata here on Monday. The proposals Indian exports. direct films. pertained to areas such as energy, telecommunications, automobiles, textiles, Several textiles companies have reported The agreement for audio-visual co- food processing, capital goods, leather, good net profits in the first three quarters of production for major opportunities in machine tools and jewellery industries. the financial year '04-05, after posting losses cooperation in Indian cinema was signed for many quarters. This has led to hefty by the Italian Minister of Culture Guliano “Italian investors are driven by Indian returns for investors in textile companies Urbani and Information and Broadcasting technologies and high quality of human over the past one year. Even foreign Minister Jaipal Reddy on February 14. capital in the country which would go as institutional investors (FIIs) have shown inputs to manufacturing, as much as the some interest in the sector. rising income of the Indian middleclass and Stating this, sources said, there was sufficient interest in Indian cinema, the expanding Indian market,” This is interesting considering that the textile generated in the wake of Mira Nair's Beniamino Quintieri, president of Italian industry was completely neglected by Monsoon Wedding's screening at the Trade Commission (ICE)he said. Italian institutional investors earlier. Higher Venice Film Festival two years ago. Many investment would accelerate the growth of institutional awareness is leading to years ago, Kabir Bedi acted in tele-serial the manufacturing sector of the Indian improved valuations for textile companies. economy, which already clocked a healthy Sandokan and had struck a chord with the 8.5% growth this fiscal. Capital goods audience there. It was only after two maker Lombardini, Merloni Termosanitari decades that Nair's film made a similar While the Sensex has given a 12 % return (household appliances), New Holland impact. over the past one year, the S&P CNX Cotton (tractors), Piaggio (motor bike), ST Textile index has given 81 % returns and the S&P CNX Textiles Product index appreciated Microelectronics (micro chips and It is to tap the Indian connection further by an impressive 97 % during the same semi conductors), Snamprogetti (oil that the two countries will be hoping for a period. Almost 70 % of the textiles exploration) are among the Italian firms that fruitful cooperation. The two countries were companies have joined the recent bull run have already laid roadmaps for more also close to signing a co-production treaty and as many as 25 companies in the sector investments in India. two years ago. A cultural exchange treaty touched lifetime highs in January 2005 was put in place last year between the two alone. Companies such as Comau, Banca countries. Nazionale Del Lavoro, Bonfiglioli The textile industry is clearly divided Transmissions, Carraro and Perfetti, too, are Indian filmmakers/producers are looking between some reputed players that attract keen to build new manufacturing capacities forward to this treaty as it will open up an PE multiples in the range of 10 to 12 times in India. In addition, a clutch of Italian banks unexplored, bigger market and through historical earnings and various small and like Intesa Banca Commerciale Italiana are Italy the European market. tracking New Delhi's plan to hike the FDI mid-cap companies that have low PE limit in the sector. According to Quintieri, the multiples but drawbacks like poor liquidity Indian market is “too protected,” by tariffs Indian Express and lack of sustained growth in the past. as well as non-tariff barriers such as a “difficult bureaucracy”. SPINNING MAGIC ET Investment bureau A lot of things are common to Indian and Italian economies. Both Indian and Italian Over the years, the textile sector in India ITALIAN CLOTHING economies are driven by small and medium has faced several difficulties in terms of COMPANY CHOOSES INDIA unfavourable or skewed government enterprises. The share of manufacturing in OVER CHINA gross domestic product of both countries is policies, high input costs, low demand higher than the world average in both growth, labour problems and the use of countries. Manufacturing accounts for 27% outdated technology. Carrera of Italy to set up Rs 500-cr unit * of GDP in India and 28% of Italy's GDP. State to hold 34% cashless equity in the “Generally, Italian companies are not big Liberalisation of trade in textiles and joint venture

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Italian apparel major Carrera Holdings Inc also holds the additional charge of Sicom, 'standalone' or 'no recourse' basis. This (HCI) has selected Maharashtra as its Asian the state-owned development bank) said: would be Videocon's second acquisition in production hub. The company will set up its “We are keen on a full backward integrated Italy. Earlier, it had bought out the stake of manufacturing facilities at an investment of text le initiative being undertaken by HCI. its Italian joint venture partner, Necchi Rs 500 crore. The projects entailed according to the Compressori, a compressor manufacturing business plan of the current special firm. The company decided set up shop in the purpose vehicle include the textile cluster state, ignoring an unmatched free power at Chincholi, the setting up of a textile Videocon had earlier expressed interest in and land incentive offered by China. The processing and finishing unit at Kolhapur, a setting up a manufacturing facility in Russia. lack of clarity in corporate laws in China and loom manufacturing unit at Kagali in The plan did not work out, as the Russian a vibrant stock exchange in India were the Kolhapur, the accounting and business government did not extend the promised two prime reasons for HCI's decision. office at Vapi and a retailing outlet. The business concession. backward integration would eventually be completed with the sourcing of cotton from A memorandum of understanding to this the cotton producing districts in The Aurangabad-based group will effect was signed between HCI and the Maharashtra.” eventually use the Anagni unit as a Maharashtra Industrial Development European hub for manufacturing consumer Corporation (MIDC) here on 12 February. products and components that will be sold Echoing his views on backward integration on the Continent. John said that the cotton variety, having a Vivek John, chief executive officer of HCI, 30-40 per cent count, that is available in The group plans to invest Rs 700 crore (Rs said: “China offered us free land and power, Maharashtra, was ideally suited to the 7 billion) on a plant to make colour picture besides financing options for procuring apparel (denim trousers) manufactured by tubes and Rs 1,500 crore (Rs 15 billion) on machinery. But we chose India because of HCI. a colour television glass project. Apart from its inherent heritage in the textile industry.” its flagship brand, Videocon, the group markets the Sansui, Akai, Toshiba and York Financial Express brands in India. The state government will hold a 34 per cent stake in the joint venture with HCI. INDIAN SHARE IN TEXTILE Business Standard State minister for industries Ashok Chavan GLOBAL MARKET IN said: “In the joint venture with HCI, the government will hold a 34 per cent cashless DANGER equity in the special purpose vehicle that will be set up for the manufacturing facilities The Associated Chambers of Commerce being set up by HCI in Solapur and and Industry of India (AASOCHAM) has Kolhapur. A single-window clearance revealed in a study that, following mechanism will ensure speedy elimination of multi-fibre arrangement administrative clearance for the project.” (MFA) from Jan. 1, China and Pakistan can Fiera Milano’s New capture the 4% Indian global textile share Complex In a related development, the Chinese and 3% share of apparel. China, being the largest exporter of textiles and apparel and government has expressed its keenness to The Nuovo Polo, or the New Complex, forge joint venture arrangements in the Asia- biggest producer of cotton, with largest spinning, weaving capacity, and Pakistan will be inaugurated on 31 March 2005 Pacific regions with Mumbai to synergise by the Italian Prime Minister, Silvio the inherent strengths of the two nations. with low labour costs and raw material Berlusconi, just 17 months after the base in cotton and man-made fibres, pose as big threats. Assocham has suggested a first stone was laid. The New Complex On HCI's preference to Maharashtra, John five-pronged strategy to introduce massive is an impressive structure, with a said: “There is a complete lack of clarity in reforms and modernisation drive to gross floor space of 530,000 sq m corporate laws in China. Under the existing strengthen the textile sector. built on a two million sq m plot of land. Chinese laws, it is not easy to understand where the responsibility of a multinational The 750,000,000-euro investment in like ours begin and end. Secondly, we faced The Times of India the New Complex is fully self-funded an insurmountable language barrier. Thirdly, by Fondazione Fiera Milano. we need to invest in a place that will allow our employees to participate in our growth VIDEOCON TO BUY ITALIAN process. Moreover, we need a vibrant stock TUBES UNIT market to work with as a mechanism to evaluate our performance on a day to day basis.” The Rs 4,000 crore (Rs 40 billion) Videocon group is buying French electronics major Thomson group's colour picture tube plant Chavan emphasised that the state in Anagni, Italy. The plant, which employs government would constitute a committee 1,500 people, can manufacture 3 million of the industry department to evaluate thrust colour picture tubes of different sizes and sectors that need to be identified and where has annual sales of about 250 million policy changes are required. euros. The Videocon group intents to meet the funding requirements for this V K Jairath, state industry secretary (who acquisition through an off shore arm, on

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INDIA BEST LOCATION FOR OFFSHORING Canada, Australia and Ireland English speaking countries including Canada, Australia and Business intelligence firm AT Kearney’s comparative study on the Ireland fared well in AT Kearney's study, particularly in the areas of best destinations for offshore business processing aims to be a people and environment. These countries also ranked high on guide for global organisations seeking the most strategic location issues such as infrastructure and lower economic and political for their business processing office (BPO). risks. Where they lost out, however, was in the area of labour costs, which were extremely high and brought down their overall financial ratings. Canada had an edge over Australia and Ireland owing to superior employee retention rates, BPO experience and proximity to the US. The country seemed particularly suited for complex business processing that required proximity to home office operations. The biggest advantage Canada offered was its political stability, which has drawn companies such as Siemens and Compaq.

Brazil and Mexico Latin American countries had an edge in terms of low labour costs, similar time zones, proximity to the US and high employee retention. Though both countries ranked higher than India on the parameter of environment, they lost out on workforce rankings. Brazil, with its hefty investments in IT and telecom infrastructure and low cost labour has managed to attract companies such as Xerox and Unisys, that have set up operations in that country. Mexico too performed well in the area of IT infrastructure. Its most significant strength however were its skills in the Spanish language. Many US firms need Spanish language capabilities today, which made Mexico a location of choice for these firms. US companies in fact have claimed saving of around 2540 % by outsourcing Spanish speaking call centre services to Mexico.

Philippines Philippines was a prime candidate for offshore business processing because of its cultural affinity with the US, US-style In its analysis, AT Kearney, has studied 11 countries to determine English speakers, nature of the workforce and low attrition levels. their viability as offshore business processing locations. The Compared to India, however, the country had a smaller pool of countries have been analysed on the basis of a special quantitative skilled resources and slightly higher labour costs. AIG, Proctor evaluation tool developed by AT Kearney, which rates countries and Gamble, American Express, Barnes and Noble are some of on the basis of three key criteria: cost, environment and people. the companies working in that market. The country-by-country analysis indicated the following:

India Clearly, India was on top in AT Kearney's survey, notching up high ratings in the areas of cost and people. The country's highly skilled, most lowest cost labour force, proved to be a great combination, specially when mixed with India's tremendous experience in the area of offshore business processing. The presence of a large number of MNCs, including global giants such as GE Capital, American Express, Citibank, among others, added to the country's credentials as a viable offshore BPO destination that's good for back office support. In financial services, for instance, Citigroup has listed India among its top offshore choices. The company set up e-Serve, which has grown to a 3200-employee company in 2003 from 1,200 employees in 1999 and performs 100 million transactions a year. Though India is expected to maintain its leadership position in the foreseeable future, its strong ratings may be tempered by gradually rising labour costs and geopolitical concerns, AT Kearney said. At the end of the day, India is likely to become a location of choice for high value analytical work, while more generic commodity processes are expected to move to lower cost environments, such as China. According to AT Kearney, India will not be the only answer to offshore business processing. Even today, leading companies are following multi-country strategies to ensure business continuity.

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language skills, lower hurdles for adhering to European data privacy regulation, and high levels of engineering and other capabilities.

Russia A large pool of technical talent including scientists, engineers and programmers made Russia a significant choice for offshore outsourcing. The drawbacks of the Russian market, however, included people retention problems, language barrier, poor IT and telecom infrastructure, history of instability and corruption.

China China's large low cost labour pool has been particularly attractive for companies with high volume transaction based business processes. The country's large domestic economy, Asian language skills and Government willingness to create better business conditions for global companies, have drawn numerous MNCs including Microsoft, Motorola and the HSBC. China's key drawbacks are its high political and economic risks, according to AT Kearney. The AT Kearney study shows that going forward, global companies will rigorously assess countries on the basis of their specific strengths and their own requirements, before selecting an offshore location. Hungary and the Czech Republic For MNCs operating in Europe, central European countries such as Hungary and the Czech Republic offered cultural similarities, Apparel

NEW MEMBERS

Associate Members URJA CREATIONS PVT LTD (MUMBAI) NRI Members LAW QUEST (MUMBAI) Manufacturers and exporters of diamond GRUPPO BPU BANCA-OM/F-019 Law firm studded gold jewellery cut and polished in (SINGAPORE) India The representative office for the Asia/Pacific KARMA ENTERPRISE (AHMEDABAD) region for the different commercial banks of Exporters of sterling silver jewellery and KING KRISHNA LUXURY ADVISORY the group beads SERVICES (MUMBAI) The company focuses on international SINGAPORE CONVENTION COMTEX ENGG. (BOM) PVT. LTD luxury brands interested in the Indian market (MUMBAI) From 8-10 April the Chamber is Indenting agents representing Italian and MARSHALL PRODUCE BROKERS CO organising a convention for the German textile machinery manufacturers in PVT LTD (MUMBAI) Asia/South Africa area in Singapore. the Indian market International brokers in commodities and ship chartering Assocamerestero, the Association of ETERNITY JEWELS (MUMBAI) Italian Chambers of Commerce Manufacturers and exporters of diamond BLACKBIRDS INFOTECH PVT LTD Abroad has divided the world into studded gold jewellery (MUMBAI) several areas. The Asia/South Africa European company specialising in taking area consists of the Italian bilateral Ordinary Members advantage of onsite/offsite/offshore delivery chambers of China, Japan, Hong ZARA EXPORTS (MUMBAI) models for information technology services Kong, Thailand, Singapore, Manufacturers of hand embroidered fabrics, Johannesburg and India, whose exporters of embroideries for prêt-a-porter BATLIBOI LIMITED (MUMBAI) Chairman is Mr Narinder Nayar, (PAP) and couture. Also inhouse-tailoring Manufacturers, marketers and traders of President, IICCI. units for hand embroidered garments textile machinery, consumables and spares

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h INDO-ITALIANC hamber t of COMMERCE and INDUSTRY

BUSINESS ENQUIRIES FROM e-mail: [email protected] / Ricamo Exports INDIA [email protected] 353 Manimahal Building, 3rd floor TMT Machine tools are manufactures Kalbadevi Road Precision Cylindrical - (Internal and Mumbai 400002 Active Baby Wear external), Surface Grinding and Roll Tel: + 91 22 220401888 5-A, 4th Street Erukkadu Grinding Machines. They are interested in Fax: + 91 22 22403223 Karuvampalayam, contacting Italian manufactures in of the e-mail: [email protected] Tirupur 641604 same interest for technological transfer. Contact: Mr Rajkumar Kanodia Tel: + 91 421 5325772/ 5326773 /5326774 They are looking for new business Fax: + 91 421 2201752 Sisilex Stampings opportunities in the food sector, and are e-mail: [email protected] SP 56 III Main road interested in contacting Italian Contact: Mr.Rajendran Ambattur Industrial Estate manufacturers of various food products. Active baby wear are manufactures and Chennai 600058 exporters of exclusive baby wear items. Tel: + 91 44 26357651 Zara Exports They are interested in contacting importers, Fax: +91 44 26241794 111 Adhyaru Industrial Estate agents of baby wear from Italy. e-mail: [email protected] Sun Mill Compound, Lower Parel Contact: Mr M Ramachandran Mumbai 400013 TMT Machine Tools Sisilex stampings are manufactures of air Tel: +91 22 24932244 C-70 Focal point compressor, high speed presses Fax: +91 22 24914466 Jalandar 144004 multislide presses, austempering furnace e-mail: [email protected] Punjab drilling and tapping machines. They are Contact: Mr Nitin Kagzi Tel: +91 181 2602032/3156005 interested in contacting manufactures of Exporters of embroidered fabrics Fax:+91 181 2602487 multi- presses in Italy. specialising in high fashion hand beaded garments; interested in contacting buyers For further information regarding business enquiries, e-mail: [email protected] and agents of fabrics from Italy. or telephone: Royden Correa + 91 22 2436 8186 x 128

BUSINESS ENQUIRIES FROM ITALY

Il Mondo in Casa Via Trieste 100 21023 Besozzo (Va) Tel: + 0039 33 277 3622 r Fax: +0039 33 297 1084 You e-mail: [email protected] Contact: Mr Luigi Antico ts! Dealers in various types of furniture, mainly Ligh interested in contacting Indian manufacturers e in of reproduction antique furniture. Nam Ingegneria Solare Solar Engineering e-mail: [email protected] Advertise with us and Website: http://www.ingegneriasolare.it/ Manufacturers of solar products (photovoltaic brighten up your and aeolic), interested in contacting Indian manufactures of solar panels. prospects! Lando Rinaldini Trading Company Tel: 0039 075 840 324 Fax : 0039 075 584 3110 Contact: Email: [email protected] [email protected] Dealers in various kinds of antique furniture and stone sculptures, interested in contacting Indian manufactures of antique furniture and manufactures of sandstone products.

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