Friday, March 30, 2012

BrahMos missile with new systems test-fired.

India today test-fired the BrahMos supersonic cruise missile with certain new systems from the Integrated Test Range (ITR) at Chandipur off the Odisha coast.

The test comes two days after defence scientists conducted a similar trial from the same site.

"The missile was test-fired from a ground mobile launcher from the launch Complex-3 of the ITR at about 1000 hours," a senior official said.

The supersonic missile, which has a flight range of up to 290 km, is capable of carrying a conventional warhead of 200 to 300 kg.

"Today's launch was a developmental trial of the land version of BrahMos incorporating certain new systems," A Sivathanu Pillai, CEO and Managing Director of the BrahMos Aerospace, an Indo-Russian joint venture company developing the missile system, said.

"We are analysing the data received from various telemetry systems that tracked the missile," Pillai said. The exact results would be ascertained after a thorough analyses, he added.

The trial was significant as it was conducted two days after a similar test fire of the cruise missile from the same site on March 28, a defence scientist said.

The cruise missile, a surface-to-surface land version, was test fired in the presence of scientists of the Defence Research Development Organisation, an official said.

The two-stage missile, the first one being solid and the second one ramjet liquid propellant, has already been inducted into the Army and Navy, he said.

While induction of the first version of the BrahMos missile system in the Indian Navy commenced from 2005 with INS Rajput, it is now fully operational with two regiments of the Indian Army.

The air and submarine launch versions of the missile system are in progress, said the official.

The Army has so far placed orders for the BrahMos missile to be deployed by three regiments of the Army and two of them have already been inducted operationally.

The Defence Ministry has also given a go-ahead to the Army to induct a third regiment equipped with the missile system to be deployed in Arunachal Pradesh along the China border.

BrahMos Aerospace is also working to develop the air as well as the submarine launch version of the missile system and work on the project is in progress.

Thursday, March 29, 2012

Top ten highlights of the BRICS Summit

The fourth edition of the BRICS summit began in Delhi today with Prime Minister Dr Manmohan Singh addressing the leaders and delegates from the five member nations. Dr Singh urged the member nations to speak in one voice on issues such as reforms of United Nations Security Council. He also said the member nations must ensure policy coordination to revive economic growth

The global situation facing us today presents a mixed picture. On the one hand, emerging market economies are growing at a healthy pace and increasing their share in global trade and output.

On the other hand, many obstacles have to be overcome if we are to sustain rapid growth in the years ahead. We are all affected by the global economic slowdown, the volatility in food and energy prices, the challenge of reconciling growth with environmental objectives, the political uncertainty in West Asia and the rise of terrorism and extremism. Our responses to these challenges may be different, but there is much common interest that binds us together.

I would like to share some thoughts on ten specific issues that I believe concern us all.

First, each of our countries has a unique demographic profile that presents its own challenges. In India, for example, we need to create 8 to 10 million jobs every year over the next decade to absorb the expected growth in the labour force. We are working on ambitious programmes of skill upgradation and education and creation of an environment conducive to an expansion of productive job opportunities. We would like to learn from the experiences of other BRICS countries on how they are dealing with these problems.

Second, the conceptual analysis that produced the positive BRICS narrative was based on a model of catch-up growth in which supply side constraints were not adequately addressed. Today, it is clear that constraints such as the availability of energy and food for countries that account for more than 40% of the world population can impede the entire story. Water is another critical area of scarcity which needs much greater attention than it has received thus far. We have much to learn from each other in how to handle these problems, and there is also room to cooperate internationally.

Third, we are united in our desire to promote sustained and balanced global economic growth. As members of the G-20, we must together ensure that appropriate solutions are found to help Europe help itself and to ensure policy coordination that can revive global growth.

We should also cooperate closely to breathe life into the Doha Round, looking for innovative solutions to overcome barriers that have stalled progress.

Fourth, as large and diverse economies, we should make a special effort to find ways to exploit intra-BRICS complementarities. We should promote greater interaction amongst our business communities. Issues such as easier business visas must be prioritized. As large trading countries, BRICS have a strong interest in removing barriers to trade and investment flows and avoiding protectionist measures.

Fifth, to revive global demand and growth, developing countries need access to capital, particularly for infrastructure development. We must address the important issue of expanding the capital base of the World Bank and other Multilateral Development Banks to enable these institutions to perform their appropriate role in financing infrastructure development.

We have agreed to examine in greater detail a proposal to set up a BRICS-led South-South Development Bank, funded and managed by the BRICS and other developing countries.

Sixth, BRICS countries must also work together to address deficiencies in global governance. Institutions of global political and economic governance created more than six decades ago have not kept pace with the changing world. While some progress has been made in international financial institutions, there is lack of movement on the political side. BRICS should speak with one voice on important issues such as the reform of the UN Security Council.

Seventh, each of our countries is grappling with how to pursue 'green' growth without compromising on current needs. At the core of this complex issue is the use of fossil energy and the impact that it has on the environment.

We must reduce energy intensity of GDP by promoting energy efficiency and developing clean energy sources. This calls for greater investments in research and development, sharing of best practices, and encouraging transfer of technology. A dialogue between energy producers and consumers would also help in ensuring stability in energy markets.

Eighth, as our countries experience significant increases in per capita income, we will also face issues related to income inequality within our countries. Inevitably, we will handle the problem differently, but it may be useful for us to share experiences in this area.

Ninth, urbanization presents common challenges for all our countries. We should encourage sharing of experience in areas such as urban water supply and sanitation, waste management, storm water drainage, urban planning, urban transport and energy efficient buildings.

Finally, the continued prosperity of BRICS is linked closely also to the geopolitical environment.

In our restricted session, we discussed the ongoing turmoil in West Asia and agreed to work together for a peaceful resolution of the crisis. We must avoid political disruptions that create volatilities in global energy markets and affect trade flows.

All of us understand the threat that terrorism poses to our societies. We must therefore enhance cooperation against terrorism and other developing threats such as piracy, particularly emanating from Somalia.

We have also agreed on the need to restore stability in Afghanistan, and the importance of sustained international commitment to its future.

Excellencies, we have drawn up an ambitious Action Plan that will be adopted today along with the BRICS Delhi Declaration. I hope that we will be able to collaborate and cooperate with each other to shape global developments and bring tangible benefits to our peoples.

India reaffirms its full commitment to work with BRICS in this endeavour.

Leaders from Brazil, Russia, India, China and South Africa met in New Delhi at the BRICS grouping today. These nations comprise nearly half the world's population and a growing share of global GDP.

Here are the ten key outcomes of the Fourth BRICS Summit today:
1) Declaration after the summit cautions the West against allowing the Iranian situation to escalate into conflict. It backs dialogue to resolve the Iranian nuclear impasse. The declaration said the crisis over Iran's nuclear programme should be resolved diplomatically and should not be allowed to escalate. It also recognised the right of Iran to pursue peaceful nuclear energy. "We agreed that lasting solution to the problems in Syria and Iran can only be found through dialogue," Indian Prime Minister Manmohan Singh said.

2) The declaration also backs a Syria-led democratic transition. BRICS voices "deep concern" over Syria and calls for "an immediate end to all violence and violations of human rights" and backs a Syrian-led political process.

3) Leaders agree to explore the setting up of a BRICS-led South-South Development Bank in the mold of the World Bank. It will promote mutual investment and will help fund infrastructure and act as alternative lender to the World Bank and other finance bodies

4) The BRICS leaders also accused rich countries of destabilising the world economy five years into the global financial crisis. "It is critical for advanced economies to adopt responsible macroeconomic and financial policies, avoid creating excessive global liquidity and undertake structural reforms to lift growth that create jobs," they said in a joint declaration.

5) IMF quota reforms: Pitch for greater representation of developing countries and emerging economies in the IMF by speeding up quota reforms. Promised changes to voting rights at the IMF have yet to be ratified by the United States, adding to frustration over reform of the G7 and the U.N. Security Council, where India and Brazil have been angling for years for permanent seats

6) Countries back a "merit-based selection-process" for the heads of the IMF and the World Bank, posts reserved customarily for a European and an American respectively.

7) BRICS leaders pitch for reform of global governance institutions, including the UN, the International Monetary Fund (IMF) and the World Bank.

8) The five BRICS nations, which collectively account for nearly half the world's population and a fifth of its economic output, signed an agreement to extend credit facilities in their local currencies, a step aimed at reducing the role of the dollar in trade between them.

9) Adopted an all-encompassing action plan that includes, among other things, meetings of foreign ministers on sidelines of the UN and meetings of Finance Ministers and Central Bank Governors on sidelines of G20 meetings/other multilateral meetings.

10) Other moves to bring their economies closer together include the launch on Friday of benchmark equity index derivatives allowing investors in one BRICS country to bet on the performance of stock markets in the other four members without currency risk. The indexes will be cross-listed on their stock exchanges from Friday.

Wednesday, March 28, 2012

BRICS Summit in Delhi: Why it's important?

The BRICS group of emerging world powerhouses - Brazil, Russia, India, China and South Africa - is expected to launch plans this week for a joint development bank and measures to bring their stock exchanges closer together.

Officials say the initiatives will take time as they need to sort out details. But they herald a new level of ambition for a bloc that brings together about half the world's people. The Middle East and energy security will also be discussed, officials say.

The BRIC acronym was coined in 2001 by Goldman Sachs economist Jim O'Neill, who was searching for a catchy way to encapsulate the broader shift in global economic growth towards emerging markets. South Africa joined the grouping in 2010 so that it became BRICS.
The countries held their first summit in 2009 and have been criticised since as nothing more than an empty acronym as they struggle to find common cause from four different continents with radically different economies, systems of government and competing priorities.

The most relevant announcement from this week's meeting in India of the countries' leaders is likely to be plans for a joint development bank in the mold of the World Bank.

The initiative would allow the countries to pool resources for infrastructure improvements, and could also be used in the longer term as a vehicle for lending during global financial crises such as the one in Europe, officials say.

Brazilian Trade Minister Fernando Pimentel told reporters in Brasilia last week that the countries would sign a deal at the summit to study the creation of the bank.

Sudhir Vyas, a senior Indian foreign ministry official, told reporters on Monday that the BRICS would have to determine how the bank would be structured and capitalised. Such an ambitious project would take time, he said.

"We don't set up a bank every ordinary day," he said.

A benchmark equity index derivative shared by the stock exchanges of the five BRICS nations will be launched on Friday, the exchanges involved said earlier this month. They would be cross-listed, so can be bought in local currencies.

The leaders are also expected to sign agreements allowing their individual development banks to extend credit to other members in local currency, a step towards replacing the dollar as the main unit of trade between them.

A senior Indian government source said the Middle East and energy security will be high on the agenda, including Iran. The Russian ambassador in New Delhi said this week that a discussion on Syria would be among his country's top priorities.

While the plenary session on Thursday is likely to focus on common ground, bilateral meetings could touch on more sensitive issues.

The exchange rate of China's currency has sparked protests from countries, including Brazilian manufacturers, for being undervalued. Most member countries also face a slowdown in their economies.

"For different reasons, each of the (countries) has got some serious policy issues to deal with here that will determine whether they continue down the path we got everybody so excited about," O'Neill said.

Despite the problems, the growth outlook is still better than in most of the developed world, meaning the BRICS' clout will likely keep growing. O'Neill predicts the bloc's total GDP will be larger than the United States within three years and China's economy alone will overtake the United States by 2027.

The BRICS group of emerging world powerhouses - Brazil, Russia, India, China and South Africa - is meeting Delhi for their fourth summit. The BRIC acronym was coined in 2001 by Goldman Sachs economist Jim O'Neill, who was searching for a catchy way to encapsulate the broader shift in global economic growth towards emerging markets. South Africa joined the grouping in 2010 so that it became BRICS.

1) The most relevant announcement at the summit is likely to be a plan for joint development bank modelled on the World Bank. This would allow the five countries to pool resources for infrastructure improvements, and could also be used in the longer term as a vehicle for lending during global financial crises such as the one in Europe, officials say. Most member countries are facing a slowdown in their economies.

2) BRICS accounts for 26 per cent of the world's landmass and 42 per cent of the global population and 40 percent of the global GDP ($18.486 trillion). Goldman Sachs predicts that "BRIC can become collectively bigger than the G-7 (the top industrial powers) by 2035".

3) BRICS countries have accounted for over 50 per cent global economic growth in the last decade.
4) Intra-BRICS trade is growing at an average of 28 percent annually and currently stands at about $230 billion.

5) The countries are also expected to sign agreements allowing their individual development banks to extend credit to other members in local currency, a step towards replacing the dollar as the main unit of trade between them.

6) The BRICS meet comes amid Western pressure to cut crude imports as part of sanctions designed to halt Tehran's suspected pursuit of nuclear weapons. China and India are the biggest buyers of Iran's crude. The BRICS group of countries has broadly agreed they are not bound by "unilateral" sanctions on Iran, measures that threaten higher global oil prices and could result in supply shortages.

7) While the plenary session on Thursday is likely to focus on common ground, bilateral meetings could touch on more sensitive issues.
8) Political developments will also be discussed, like the situation in Syria. At the UN recently, India took a very different position from China and Russia and supported a Western resolution that demanded the departure of Syrian President Bashar al-Assad.
9) BRICS held its first summit in 2009 and has been criticised as nothing more than an empty acronym as it struggles to find common cause from four different continents with radically different economies, systems of government and competing priorities.
10) Tibetan activists have been protesting the presence of Chinese President Hu Jintao in Delhi. Many Tibetans have been detained by the Delhi Police, provoking sharp criticism.

Monday, March 26, 2012

Why do we continue to ignore China's rise? Arrogance.

Martin Jacques, author of a bestseller on China, asks why the west continues to approach the rise of the new global powerhouse with a closed mind. We obsess over details of the race for the White House, yet give scant regard to the battle to replace China's current leadership. If we fail to pay heed to the political and economic shift of gravity, we will be sidelined by history.

History is passing our country and our continent by. Once we were the centre of the world, the place from where power, ideas and the future emanated. If we drew a map of the world, Europe was at its centre. That was how it was for 200 years. No more. The world is tilting on its axis in even more dramatic style than when Europe was on the rise. We are witnessing the greatest changes the world has seen for more than two centuries. We are barely aware of the fact. And therein lies the problem.

I vividly recall when the first edition of my bookWhen China Rules the World was published almost three years ago. At the many talks I gave, I showed a Goldman Sachs chart that projected that the Chinese economy would overtake the US economy in size in 2027. Invariably someone would point out this was only a projection, that the future was never an extrapolation of the past, that it was most unlikely the forecast would come to pass and certainly not in this time frame. No one suggested that the projection underestimated the date, even though the western financial crisis was already almost a year old.

The latest Economist projection suggests China will overtake America in 2018. So why are we – and Europe – so far behind the curve? Why do we insist on living in a world that was rather than is? Why are we so out of touch with both the speed and import of China's rise?

Our ascendancy of the past two centuries – first Europe and then the US – has bred a western-centric mentality: the west is the fount of all wisdom. We think of ourselves as open-minded but our sense of superiority has closed our minds. We never entertained the idea that China could surpass the US. Backward, lacking democracy, bereft of Enlightenment principles,the product of a very different history, it was not western. So how could it? We were the universal model that everyone else had to embrace to succeed. The only form of modernisation that worked was westernisation. China would inevitably fail: the project was unsustainable. By insisting on seeing China through a western prism, we refused to understand China in its own terms. Our arrogance bred ignorance: we were not even curious.

China is, indeed, in so many ways, not like the west. It is not even primarily a nation state but a civilisation state. Whereas the west has primarily been shaped by its experience of nation, China has been moulded by its sense of civilisation. This helps to explain why the Chinese place such a huge emphasis on unity and stability, their reverence for the state and their embrace of ideas such as "one country, two systems" in Hong Kong. Similarly, unlike Europe, China never sought to acquire overseas colonies but established a tribute system in east Asia. The Chinese state bears a fundamentally different relationship to society compared with any western state. The state is seen as an intimate, as a member of the family, rather than, as in western discourse, a problem, a threat, or even the enemy. For the Chinese, the state is the embodiment of its civilisation: as such, it could not be more important, it lies at the heart of the Chinese pysche.

It is impossible to understand or make sense of China through a western prism. As China becomes a great power and, over the next two decades, steadily usurps America as the dominant global power, we will no longer have any alternative but to abandon our western parochialism and seek to understand China on its own terms. But the shift in mindset that faces us is colossal.

What does it mean to be a civilisation state? What was the tributary system and how will it shape China's future behaviour? Why is China's idea and experience of race so different from ours? Just as every non-western country was compelled during the 19th and 20th centuries to understand the west in its own terms, it is now our turn to make sense of a country so different from our own.

It will be a Herculean task: we always look west, hardly ever east. When Bo Xilai, a leading contender for one of China's top positions, was dismissed more than a week ago, it received little attention in our media even though it was the most important event of its kind for more than two decades. Compare, if you will, the attention, devoted by the British media – notably the BBC and quality newspapers – to the Republican primaries with that given to China in the build-up to the Communist party congress in November, when President Hu Jintao and Premier Wen Jiabao will be replaced by Xi Jinping and Li Keqiang. The latter is of far greater consequence yet the coverage is paltry in comparison.

We have an enormous China deficit that urgently needs addressing. It is replicated throughout our culture; there has been much talk of promoting Mandarin in our schools and yet, in both the state and private sectors, pitifully few offer it as a serious option. Our economy exhibits the same morbid symptoms: Britain exports more to Ireland than it does to China, India, Russia and Brazil combined. Unless we address these questions, we face the prospect of being sidelined by history.

China's remarkable economic growth started in 1978, but as its economy was then only a 20th the size of America's, its global impact was minuscule. By the turn of the century, however, after more than two decades of double-digit growth, the Chinese economy was more like a quarter of the size of America's, with the consequence that its global effect was of an entirely different order. The story, moreover, was no longer simply about China because by then its rise had begun to transform the world. Only with the financial crisis in 2008, however, did the west finally begin to wake up to the implications.

Although countless commentators speak lazily of the global financial crisis, this is a misnomer. A visit to Beijing will soon dispel the illusion. The place is brimming with energy, elan, confidence and brio. While the west is mired in austerity and stagnation, with a psychology to match, China is riding an extraordinary wave of optimism. In 2010, according to a Pew poll, 91% of Chinese felt good about their country's economy compared with 24% in the US and 20% in Britain. While most western economies are still smaller than they were before 2008, the Chinese economy has been growing in the region of 9-10% a year. That is why it will overtake the US almost a decade earlier than previously predicted.

2008 ushered in a new era, the beginning of a Chinese world economic order. Until recently the US largely shaped globalisation but now China is increasingly assuming that role. Its most dramatic expression is trade. China will shortly become the world's largest trading nation. It imports huge amounts of natural resources and exports a massive volume of manufactured goods: in 2011, it overtook the US to become the world's largest producer of manufactured goods, a position America had previously held for 110 years. In 1990, there was hardly a country in the world for which China was its chief trading partner. By 2000, there were a few, but nearly all were in east Asia. By 2010 the list stretched around the world, including Japan, South Africa, Australia, Chile, Brazil, India, Pakistan, the US and Egypt. Imagine how long the list will be in 2020.

China is rapidly emerging as a great financial power. In 2009 and 2010 the China Development Bank and the China Exim Bank – which I would guess the great majority of Observer readers have never even heard of – lent more to the developing world than the World Bank. Just as the Rothschilds funded much of Europe's industrialisation in the 19th century, so these two banks are now doing the same on a far larger canvas, namely the entire developing world, comprising 85% of the world's population. Meanwhile, in late 2008, China began making the renminbi, hitherto a currency that circulated only in China, available for the settlement of trade. The HSBC has predicted that by 2013-15 half of China's trade with the developing world (which constitutes more than half of China's total trade) will be paid for in renminbi. It is the first stage in the process by which the renminbi will replace the dollar as the world's dominant currency.

The centre of gravity of the global economy is remorselessly shifting from the developed to the developing world. China is the main player and the outcome will be the rapidly declining influence of the developed world and the reconstitution of all major global institutions, notably the International Monetary Fund and the World Bank, to reflect this.

Pause for a moment and think what it feels like to be in Beijing these days. The place is on fire. It is alive with argument and debate. A country growing at 10% a year is constantly throwing up huge and novel problems that require response and solution. It is a far cry from Britain mired in stagnation, where debate rarely ever breaks new ground and for the most part is backdated. In contrast, China is not only remaking itself with extraordinary speed, but is also remaking the world. Beijing resembles London in 1850 or Washington in 1950, but on an epic scale. It is the most interesting and stimulating city in the world.

I spent much of last autumn as a visiting professor at Tsinghua University in Beijing. My stay was a whirl of talks and discussions. Far from the western image of China being devoid of debate, Beijing is positively throbbing with it. And it is extraordinarily open-minded and open-ended. I was invited to give a lecture at the ministry of foreign affairs to around 100 young diplomats at which I suggested that a foreign policy based on Deng Xiaoping's principles was no longer appropriate: a new approach was required that reflected Chinese growing global interests while also drawing on its history. Far from being taken aback, those present entered into a vigorous discussion. These debates, furthermore, are infused with huge significance. As China becomes a great global power they will shape its future policies and priorities – and thereby the world.

One might think that in such times, and with such glittering prospects, China would be full of hubris, bordering even on arrogance. On the contrary, the opposite is the case. The Chinese are still deeply preoccupied with the colossal problems that confront a still poor and developing country of 1.3 billion people. Inequality has soared, sowing the seeds of growing resentment against the rich; land seizures, as events in Wukan recently demonstrated, provide a continuing threat to social stability; massive corruption is corroding the sense of justice and fairness. While possessed of the kind of inner confidence and experience that comes from being the heirs of a great civilisation, the Chinese have no illusions about where they have got to and the tasks that lie ahead.

In November, the Communist party will hold its 18th congress. It will elect a new leadership for the next 10 years during which time China will undergo profound change. Already, there is a major shift under way in economic priorities from low value-added production and massive exports towards higher-end production and domestic consumption. During the next decade we can expect important political reforms.
In Britain, meanwhile, China will continue to receive scant coverage. But, kicking and screaming, forever looking backwards to the age of the west, we will, nevertheless, be dragged into the age of China. Time waits for no country. Over the next decade, we will increasingly come under China's spell.

It is worth reminding ourselves that last October, when the future of the euro was in grave doubt, European leaders pleaded with China to extend a huge loan. Britain is also broke and needs Chinese money for its infrastructure projects. There will be a growing clamour to learn Mandarin. And, as yet hardly recognised, we will find ourselves coming under the growing influence of Chinese soft power, be it the influence of Chinese parenting or the country's stellar educational performance. China will irresistibly shape our future.

PM gives firms six reasons to invest in India

Investment from South Korea is a "priority" for India, visiting Prime Minister Manmohan Singh said on Monday, adding that the government was taking "proactive" steps to improve the business climate and move forward with the POSCO mega steel plant project in Orissa that has been plagued by farmer protests.

"Investment from Korea is a priority for India. We will take pro-active steps to address investor grievances and improve the business climate in the country. Many states of our Union have been actively encouraging foreign investment and we will support these efforts. I urge Korean industry to have faith in India," Dr Singh said in his address to South Korean CEOs during his two-day official visit to this country.

"I recognise that sometimes our processes can be slow but there are effective mechanisms for resolution of problems and differences and a strong rule of law. The government is keen to move forward with the POSCO project and there is some progress in this regard. I believe that India is a stable and profitable long-term investment opportunity," he told the 20 CEOs, including those of Hyundai and Samsung, who attended the meeting.

The POSCO steel project, India's largest foreign investment project estimated at $12 billion, has been hobbled for years by local protests against land acquisition of over 4,000 acres in Paradip in the eastern coastal state.

The POSCO issue had figured in the joint statement issued after the Summit talks Sunday between Manmohan Singh and South Korean President Lee Myung Bak, which noted that there had been progress forward on issues like land acquisition.

This is the third time in two days that Manmohan Singh has spoken of how much India values South Korean investments.

Noting that many South Korean companies have become a household name in India, Manmohan Singh said on Sunday he hoped to see many more, particularly from the medium and small sectors, setting up shop there.

"I invited Korean firms to invest in India in a big way. Companies such as LG, Hyundai and Samsung are already household names in India. We would like to see small and medium sized Korean companies also making India a base for their manufacturing," the prime minister said at a joint media interaction with President Lee after their Summit.

"I informed President Lee that India is making a huge effort in upgrading our physical infrastructure. We want Korean companies to help us realize this objective and benefit from the opportunities provided by this," Manmohan Singh added.

He again referred to the Korean companies during his speech at a lunch hosted by President Lee.

At the CEO's meeting, to illustrate why India was such an attractive investment destination, Manmohan Singh noted that the country had managed to maintain a 7 percent growth rate in the last few years and listed six fundamentals that would enable it to return to 8-10 percent growth in the coming years:

•A domestic savings rate of 33-35 per cent of GDP and growing,

•A very young population, with half of the working population in its twenties,

•Heavy investments in education, health and agriculture to give a new deal to rural India. Rural markets are booming and the middle class is growing rapidly.

•Huge expansion in higher education and skills and development of ports, airports, railways, energy and roads. India is poised to continue to be a frontline player in the global knowledge economy.

•Ambitious plans for the development of physical infrastructure. Planning to secure investment of almost $1 trillion in the next five years in new projects in highways, power plants, mass transport systems, ports and airports. This will be achieved through both public and private investment and Public-Private Partnerships.

•Determined to pursue a strategy of green growth. Committed to increasing energy efficiency and the share of renewables, including solar and nuclear power, in the energy mix. There will be large business opportunities and I am aware of Korean capabilities in environmentally friendly technologies.

"Korean companies have always recognised these strengths and competitive advantages of the Indian economy. They were among the early investors to look at India as a strategic investment destination," Manmohan Singh said, adding that Hyundai has a 25 percent market share in India's domestic passenger car industry.

Noting that after the implementation of Comprehensive Economic Partnership Agreement (CEPA) on January 1, 2010, bilateral trade has surged by roughly 65 percent in two years and reached $20.6 billion in 2011, the prime minister said: "However, it is still below its huge untapped potential."

"Therefore, President Lee and I decided yesterday to revise the bilateral trade target to $40 billion by 2015. This is a challenge as well as an opportunity that we must both seize together," Manmohan Singh added.

Small-town India fuels rise of online shopping

Growing up, Puneet Verma, an artist from Bihar often asked his relatives in New Delhi or Mumbai to gift him books. He had no other option because his neighbourhood book-sellers had never heard of his favourite writers such as Neil Gaiman or Junichiro Tanizaki.

This was before Verma discovered online shopping. Six years ago, he first used, currently India's largest online retailer of books and has been hooked to it ever since. Now he buys almost all his books and gadgets online.

"It is convenient," Verma says. "You get stuff at competitive prices that you will not find in local stores."

A new report by the Boston Consulting Group says online retail in India could be a $84-billion industry by 2016 --more than ten times its worth in 2010 -- and will account for 4.5 percent of total retail. E-commerce entrepreneurs and experts say small-town India will play a big role in the online bonanza.

Balendu Shrivastava, Group Business Director, Internet & Mobile Association of India, says more than 60 percent of online shoppers would come from beyond the top 8 metros by the end of 2012.

Easy access

Organized retail is hardly a pan-India phenomenon and large chains make up less than 10 percent of the market. As a result, smaller towns often don't have access to the merchandise available in metros such as Bangalore or Mumbai.

Internet and online retail sites have emerged as the great leveller. India has become the third-largest Internet market, based on the total number of users, and 60 percent of these come from smaller towns.

"Internet penetration ... has allowed online consumers to actually get access to the same selection, pricing, discount and deals, that so far was available to their cousins in larger cities," says K. Vaitheeswaran, CEO of

Besides books, online shoppers in India buy goods such as lingerie and jewellery, said Kunal Bahl, co-founder of

"Where will you find Victoria's Secrets in place like Bhatinda?" says Bahl, whose site offers daily deals and is considered India's Groupon.

"However, Bhatinda is also very rich and people have aspirations to these products," he said, referring to India's rising middle-class.

India has one of the world's youngest Internet population, with 75 percent of users under 35, and many of them have much more disposable income than their parents did.

Travel revolution

For many Indians, booking railway tickets online was their introduction to Internet shopping. The government railways ticket booking portal and travel firm MakeMyTrip Ltd, which is listed on NASDAQ, revolutionised the travel industry at a time when buying train tickets meant waiting for long hours at railway counters.

"I keep telling people that IRCTC created e-commerce in India first," says Alok Kejriwal, CEO of online gaming company Games2win. "...and with that the government solved the biggest problem on earth, and that is buying tickets."

More than a decade after MakeMyTrip was founded, 75 percent of the B2C online market is still dominated by the travel industry, according to a Dec 2011 study by Edelweiss.

But the same study expects the next leg of e-consumption to be driven by apparel, books and consumer goods.

Already, it is the non-travel that gets the highest traffic in India among e-commerce sites.

Apart from offering discounted and fast service, such sites have also provided a national platform to regional merchants by selling their products online.

"India is a country of micro entrepreneurs," says Snapdeal's Bahl. "We are enabling these ... unknown brands of local merchants to get access to consumers across the country."

While many of India's e-commerce sites have been inspired by successful models abroad such as Amazon, most have had to improvise to survive locally. The biggest departure from the western model has been offering cash-on-delivery for products.

"A lot of people do not understand how to use a credit card," says Rohit Bansal, co-founder of Snapdeal.


Shashank Tiwari is a 25-year-old mining engineer in Jharkhand. In his neighbourhood, there are no shopping malls, cinema halls or bookstores. He calls it one of the most "backward" districts in India, and none of the online retailers deliver there. He has to travel almost three hours to collect his shipments.

E-commerce companies rely on courier service providers to deliver their goods. An Edelweiss study says that only about 10,000 of over 150,000 pin codes in India are covered by these delivery services -- leaving out a huge chunk of the country.

"Areas not served by logistics companies will not be able to participate in online commerce or else, ecommerce companies will have to extend their backend for additional coverage," the report said.

But reworking the supply-chain can add to the financial burden on e-commerce sites, which critics claim are already unprofitable because of the heavy discounts they offer to attract customers.

"The people who are financing and managing this industry ... have lost track of what real business is," says Kejriwal of Games2win. "The same goods are being sold by zillions of people and there is no price control."

The lack of a money-making business model makes these sites vulnerable to bankruptcy or acquisition. Amazon's entry into India, with the website, makes the competition even fiercer.

Business owners say that Amazon's entry validates the Indian e-commerce industry and they can learn a lot about the business from the world's biggest online retailer.

As the online battle heats up, tech experts say the coming year would be a time of Darwinian struggle, where few winners would emerge.

"Next 12-18 months, you will see a lot of consolidations happening in the industry," says Vaitheeswaran.

Sunday, March 25, 2012

James Cameron completes journey to Earth's deepest point

Hollywood icon James Cameron has completed his journey to Earth's deepest point. The director of "Titanic," ''Avatar" and other films used a specially designed submarine to dive nearly seven miles (11 kilometres). He spent time exploring and filming the Mariana Trench, about 200 miles (320 kilometres) southwest of the Pacific island of Guam, according to members of the National Geographic expedition.

Cameron returned to the surface of the Pacific Ocean Monday morning local time, Sunday evening on the US East Coast, according to Stephanie Montgomery of the National Geographic Society. His return was a "faster-than-expected 70-minute ascent," according to National Geographic. The scale of the trench is hard to grasp - it's 120 times larger than the Grand Canyon and more than a mile (1.6 kilometres) deeper than Mount Everest is tall.

Cameron made the dive aboard his 12-ton, lime-green sub called "Deepsea Challenger." Swiss engineer Jacques Piccard and Don Walsh, a US Navy captain, are the only others to reach the spot. They spent about 20 minutes there during their 1960 dive but couldn't see much after their sub kicked up sand from the sea floor. One of the risks of a dive so deep was extreme water pressure. At 6.8 miles (10.9 kilometres) below the surface, the pressure is the equivalent of three SUVs sitting on your toe.

Cameron told The Associated Press in an interview after a 5.1 mile (8.2 kilometre)-deep practice run near Papua New Guinea earlier this month that the pressure "is in the back of your mind." The submarine would implode in an instant if it leaked, he said. But while he was a little apprehensive beforehand, he wasn't scared or nervous while underwater.

"When you are actually on the dive you have to trust the engineering was done right," he said. The film director has been an oceanography enthusiast since childhood and has made 72 deep-sea submersible dives. Thirty-three of those dives have been to the wreckage of the Titanic, the subject of his 1997 hit film.

Saturday, March 24, 2012

Harvard University meet on where India is headed

International leaders from government, business, non-profit, media and entertainment sectors are meeting in Boston over the weekend to discuss where India stands currently and where it is headed over the next decade.

The discussions are part of the 9th Harvard India Conference with the theme of India: The Next Frontier, to be co-hosted by Harvard Business School and Harvard Kennedy School of Government on March 24 and 25 at Cambridge, Massachussetts and Boston.

The conference promises to present a clear, unbiased perspective on where India is headed over the next decade, taking with it the lives and destinies of a billion people and the attached fortunes of an integrated, increasingly dependent world.

Panel discussions with experts in their respective fields would focus on future of the Indian economy, healthcare, education, entrepreneurship, retail and energy, according to organisers.

Hardeep Puri, India's Permanent Representative to the UN, and Bharat Desai, chairman of Syntel Inc, are the keynote speakers at the conference.

The India-heads of Apax partners, TA Associates, TPG, New Silk Route & Tata Capital Firms will talk about the challenges and opportunities of the booming investing market in India.

Speakers include Nitin Nohria, Dean and Richard P. Chapman, Professor of Business Administration, Harvard Business School, and Bollywood personalities like Abhinay Deo, director of "Delhi Belly", and Ritesh Sidhwani, producer of "Zindagi Na Milegi Dobara".

Jay Sean, popular Indian origin singer from London, will dwell on building a brand and successful business in the biggest entertainment market in the world.
The Tata group of companies, which gifted $50 million to the Harvard Business School, is the title sponsor of the conference.

The South Asian Times, the popular New York-based premier newspaper for the South Asian community, is the prime media sponsor of this event.

Rising Chinese wages a headache for US firms

After decades of US caterwauling about the crippling impact of China's low labour costs on domestic manufacturing, firms state-side now fret about the impact of rising Chinese wages.

First came anger, then depression and then acceptance.

In the three decades since Deng Xiaoping began opening China's economy, US manufacturers have gone through something resembling Elisabeth Kuebler-Ross's five stages of grief.

Industry cried foul, then groped around for solutions, before accepting the rules of the game had changed - deciding to make a buck by offshoring some of their own production to China.

To be sure, there are still frequent spasms of anger over China's ability to produce goods at "unfair" prices, notably in election years.

But the bitter pain of jobs lost and factories closed has been sweetened just slightly over the years.

Using cheap Chinese labourers has resulted in $499 iPads, bumper corporate profits and -- in turn -- fatter pensions for those who have stock-based plans.

But there are already signs that this low-cost, high-reward Chinese paradigm is coming to an end.

Late on Thursday, US footwear giant Nike reported it had made even more profit than it did the quarter before, yet its stock sank.

Investors hacked about $1 billion off the company's value on Friday because of a reference to "declining gross margin" stashed in the bowels of the firm's quarterly report.

The details are complicated, but Nike's jargon in part referred to rising wages in places like China taking a chunk out of profits.

Indeed, the details show rising wages -- along with some other factors like higher material costs -- caused Nike's margins to fall two per cent in just one year.

That spells extra costs worth tens - if not hundreds - of millions of dollars.

But it is far from enough to make Nike's business unviable, so why the worry?

According to Sara Hasan, an analyst who follows Nike for investment firm McAdams Wright Ragen, the concern is that wages in China are only going to increase from here on in.

"It's a very big deal, and it's a longer-term issue definitely," she said.

In the last year, wages in China's southern industrial belt have risen 10 per cent, according to a report by Standard Chartered. They rose 11 per cent the year before that.

The Shanghai authorities recently announced the minimum wage will rise 13 per cent, doubtless prompted by labour shortages and worker unrest.

"As (China's) economy grows and as the middle class grows, I think the pressure is going to continue," said Ms Hasan.

Nike itself admits the costs are unlikely to fall any time soon: "While some raw material costs are starting to ease, we have not seen them retreat to their previous levels; for other input costs such as labour, upward pressure continues," CEO Parker told investors.

That leaves US manufacturers with only a handful of options: accept lower profits, pass the cost on to consumers or lower labour costs some other way.

Part of the answer for Lacrosse, a small Wisconsin-based footwear firm, was to shift some production from China to Vietnam, where wages are still relatively low.

"As costs in China have grown... we make a growing amount of our product in Vietnam," said Michael Newman, who deals with investor relations for the company.

Western China, Thailand, Malaysia and Indonesia are also cited as possible alternate production locations.

That has the added benefit of diversifying the supply base, but moves production away from China's lucrative domestic market.

For bigger firms, the answer may be to trim supply chains or tap consumers.

According to Ms Hasan, Nike is in a good position to leverage its brand strength and pass prices on to US and other consumers.

In the longer term, Nike also hopes to cut production costs the old-fashioned way, through increased automation.

The company has invested its hopes in FlyKnit technology, which knits a shoe upper in one go, reducing the need for workers to assemble dozens of pieces.

Consulting firm Accenture believes that through a mix of these responses, manufacturers with a large footprint in China can handle wage increases of as much as 30 per cent without too much trouble.

"However," its report published earlier this year noted, "China's low-labour cost advantage will not last forever."

That will undoubtedly change the rules of the game for US manufacturers once again.

Friday, March 23, 2012

Apple's new iPad available in 25 more countries today

Apple's new iPad will be available in 24 additional countries starting today.

Thew new iPad was announced by Apple on 7th March and it went on sale in 9 countries last Friday, March 16th. The new iPad has been an unprecedented success, registering over 3 million in sales in US, Australia, Canada, France, Germany, Hong Kong, Japan, Singapore, Switzerland and UK over the opening 3 days.

The launch hasn't been without controversy though. First came the complaints that the new iPad runs hotter than its predecessor, followed by recent reports of Wi-Fi related issues.

The countries receiving the new iPad today are Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, Greece, Hungary, Iceland, Ireland, Italy, Liechtenstein, Luxembourg, Macau, Mexico, The Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.

Apple is yet to announce the date the new iPad will be available in India.

Runaway planets are universe's fastest objects

Runaway planets zipping through space at mind-numbing speeds of 30 million miles per hour are now the fastest objects in the universe, says a study.

Seven years ago, the discovery of the first runaway star, shooting out of our Galaxy at a staggering speed of 1.5 million mph, set astronomers on a course of exploration.

If a star can get tossed outward at such an extreme velocity, could the same thing happen to planets, they asked themselves, the journal Monthly Notices of the Royal Astronomical Society reported.

"Other than subatomic particles, I don't know of anything leaving our galaxy as fast as these runaway planets," said Idan Ginsburg of Dartmouth College, US, who led the study, according to a Harvard-Smithsonian statement.

"These warp-speed planets would be some of the fastest objects in our Galaxy. If you lived on one of them, you'd be in for a wild ride from the centre of the galaxy to the Universe at large," said astrophysicist Avi Loeb of the Harvard-Smithsonian Centre for Astrophysics.

A typical hypervelocity planet would slingshot outward at seven to 10 million mph. However, a small fraction of them could gain much higher speeds under ideal conditions, even as high as 30 million mph.

Such speedy worlds, called hypervelocity planets, are produced in the same way as hypervelocity stars. A double-star system wanders too close to the supermassive black hole at the galactic centre.

Strong gravitational forces rip the stars from each other, sending one away at high speed while the other is captured into orbit around the black hole. For this study, the researchers simulated what would happen if each star had a planet or two orbiting nearby.

They found that the star ejected outward could carry its planets along for the ride. The second star, as it's captured by the black hole, could have its planets torn away and flung into the icy blackness of interstellar space at tremendous speeds.

Thursday, March 22, 2012

Why Indian IT majors want an image makeover in America

As the US Presidential election ramps up the rhetoric against offshoring jobs, India's flagship software services providers are seeking an image makeover.

For Wipro, Infosys and others, multi-billion dollar outsourcing giants with US-listed shares, the challenge is to be seen less as a cheap Bangalore dump for U. companies shipping work overseas, and more as responsible firms creating jobs and investing in America's future.

"If young people in America look at us as a career opportunity, we have succeeded," T V Mohandas Pai said six years ago when he was a board member at Infosys.

Today, India's $100 billion IT and Business Process Outsourcing (BPO) industry says it directly employs 107,000 people in the United States, close to a third of whom are Americans, a figure that has doubled in five years.
The industry's makeover takes on a new urgency ahead of the US Presidential election in November where jobs will be a crunch issue. President Barack Obama has sharpened his criticism of US firms 'exporting' jobs, seeking to tax them more and use that money to help those that keep jobs at home.
"I'm responsible for transforming the organisation into one having a look and feel of a US corporation ... changing Infosys in USA to Infosys USA," Padmanabhan Rao, who heads the company's US operations, writes as his LinkedIn profile.
It's increasingly a business reality.
The outsourcing industry, championed by India but spreading to other Asian centres such as the Philippines, expects to hit $225 billion in annual revenues by 2020 - an unrealistic target without strong growth in the United States, the biggest market.
Infosys has 15,000 employees in the United States, including those with shorter-term work permits, and will have hired another 1,200 locals in the past year. North American clients generate close to two-thirds of global revenue. Infosys employs more than 145,000 people worldwide.
Rao told Reuters the goal for Infosys is to double local recruitment, and that may happen as early as the next fiscal year. Part of his job, Rao says, is "to get Infosys to think global, but act local."
Indian outsource firms are "willing to step up and do things a little bit different to show their investment in the US economy," said Helen Huntley, a vice president at Gartner Inc, noting the tone of political debate has grown harsher in line with greater economic uncertainty.

"That's political motivation as well as motivation for clients ... (who want to see) feet on the street," she said.
By setting up shop in the United States, Indian outsourcers could win more business from smaller US customers under pressure in an election year to hire and outsource locally.

"It plays naturally to Indian providers who want to show a presence in the US," said Huntley.
The Indian firms are increasingly looking to transfer staff from their clients on to their own books to secure orders. This also helps as a public relations tool to raise their profile as local job creators, Huntley noted, and can qualify for certain state incentives.
When Tata Consultancy Services opened a centre in Cincinnati, Ohio in 2009, the state governor attended the ribbon-cutting ceremony.
"The Indian companies are very engaged" in getting local political support, noted Huntley. TCS, India's No.1 software services exporter, last month opened a technology centre in Santa Clara, California to serve as global headquarters for its mobile computing work.
Wipro, which began after the Second World War as a sunflower oil producer and moved into India's fledgling IT sector in the early 1980s, also wants to boost its overseas, or ex-India, workforce. Chairman Azim Premji wants as much as half his total staffing to be local, in the United States and elsewhere, and he holds up the firm's Atlanta, Georgia centre as an example of how Wipro has successfully recruited local talent.

"That's our goal for the next 2-3 years and I think it's completely do-able ... even if I have to thrust it from the top," Premji said in January after Wipro reported a 10 per cent increase in quarterly profit.

Wipro employs some 10,000 people in the United States, Chief Marketing Officer Rajan Kohli said in response to an e-mailed request, adding Atlanta is a "strategic development centre", with US citizens making up 80 per cent of its 675 staff. Wipro's global workforce tops 120,000.

"We're driving diversity in our hiring by consciously inducting local talent, military veterans and campus recruits," Kohli said, and expects to replicate the Atlanta model in at least two other US cities.

At Infosys, CEO SD Shibulal is looking to add small development centres in the United States. As well as its large campuses in India, Infosys has 15 delivery centres worldwide, from the Czech Republic and Poland to Brazil and China - facilities where software programs are written and applications developed and tested.

"I can say this: One-third of all growth in talent (in the US) will be local," Shibulal told Reuters.

The larger outsourcing firms are not alone in buffing up their global credentials.

MindTree Ltd, a $500 million IT and electronics engineering services provider with a client list that includes Microsoft and Kraft, has engaged global branding consultant SiegelGale for its image makeover, co-founder Subroto Bagchi told Reuters.

Bangalore-based MindTree will soon open its first 400-seat delivery centre in the United States, and expects eventually that as much as a third of its workforce will be local to wherever it does business, s ai d Scott Staples, another co-founder of the company.


And that's another challenge for Indian companies hoping local US recruitment will give them a more American face.

"We don't have a lot of (local) Java programmers with two years' experience running around," said Stephanie Moore, a vice president at Forrester Research Inc, echoing Obama's lament that too few Americans opt for STEM (science, technology, engineering and maths) streams at schools and colleges.

Wipro's Premji agrees, noting that while most customer-facing sales and support hires are local, the majority of technical staff is on Indian-origin visas.

"There's a huge shortage of technical IT professionals in the United States," he said.

For now, the vast majority of the 2.8 million people employed in the Indian IT/BPO industry work in India. At the top five Indian providers, only 40,000 - fewer than 1.5 per cent - are non-Indian, according to the National Association of Software and Services Companies (Nasscom), an Indian software industry lobby group.

"Wipro isn't yet a household name on US campuses, but we have been able to generate significant and increasing interest," said Kohli. "We've kicked off major initiatives on campuses to showcase our differentiators and attract the best talent."

Kiran Karnik, a former Nasscom President and author of "The Coalition of Competitors" published in February, sees parallels between now and the first backlash against the loss of US jobs to India's outsourcers following the dotcom bust - with the United States slowly emerging from an economic downturn and facing presidential elections where jobs will figure large.

Back then, Nasscom made itself invisible, but engaged a PR/advocacy agency and networked with 'sister body' the Information Technology Association of America, the US Chamber of Commerce and the US-India Business Council.

This week, Nasscom has published a report to showcase just how it is contributing to the US economy, by creating jobs, paying more than $15 billion in taxes over five years and investing another $5 billion through US acquisitions.
Indirectly, India's IT/BPO industry supports 280,000 jobs in the United States, the report said.
Wipro, Infosys and other Indian firms in the U.S. market help run local community marathons and university fun runs and, at last August's InfosysConnect in Las Vegas, an event for the company's partners, analysts and clients, tennis star Andre Agassi was an invited guest to share the stage with Stephen Pratt, Infosys' top business consultant.

"Incremental goals add up over time," Pratt tweeted from the event.

Out of love with China, fashion factory moves west

A string of countries on and around the fringes of western Europe are becoming new centres of fashion clothing manufacture as China moves up the industrial value chain and brands discover adaptable suppliers closer to home.

Sourcing from China is getting more expensive, but it is still cheap, so a decision to go for Made in Morocco or Made in Moldova instead is not all about price.

This is an industry where fickle consumer behaviour is the main driver of demand. Players have to be nimble to survive against heavyweights like Inditex's Zara, which can have a catwalk dress look-alike in its stores within weeks, and which already counts 60 per cent of its offering as "close or nearby production" - Europe and nearby places.

"Of course it is more expensive for us to make things in Turkey and Tunisia than in China, but it is not that much more expensive considering how much salaries (in China) have increased, and it is much more convenient for us because it is closer, so we have more control over quality," La Perla designer Giovanni Bianchi told Reuters.

The maker of fine lace underwear moved production of its mass-market Studio La Perla label to Turkey and Tunisia from China late last year, and has also moved sourcing of its nightwear from China to Portugal.

It estimates that for every 10 euros it spends in China on labour, for the same work, it pays 15-16 euros in Tunisia or Turkey - so China remains cheapest by its calculations.

But that is changing.

China's national wage index has been rising on average by 15 percent every year in the past five years. Institut Francais de la Mode, France's fashion trade group, estimates monthly pay in China's coastal areas soared to 400 euros in 2011 from 240 in 2005. That compares with current pay rates of 160 euros in Tunisia, 152 euros in Morocco, and 200 euros in Moldova.

And tougher manufacturing terms demanded by Chinese factories have also given fashion companies second thoughts about working with them.

French Fashion houses Jean-Charles de Castelbajac and Barbara Bui , and ready-to-wear group Etam , have also recently moved part of their production closer to home.

They say Chinese manufacturers put increasing pressure on them to place orders bigger than they want to commit to, risking unsold stock and resulting discounts that could harm brand image.

"The price/quality ratio we got in China was no longer what we wanted," said Celine Lopes, who oversees production at Jean-Charles de Castelbajac and recently moved production to Hungary.

Barbara Bui moved output to Hungary, Bulgaria, Romania and Turkey in 2010. "The distance and language barrier in China made it difficult for us to always control quality," said Deputy Chief Executive Jean-Michel Lagarde.

"We can more easily impose our way of doing things when we work with manufacturers in southern and eastern Europe."

Etam has 20,000 employees in China, but last month it announce a move for some of its production to Tunisia, Morocco, Portugal, Greece and Turkey.

"This is to increase our reactivity and gets things to market faster," said managing director Laurent Milchior.


Anne-Laure Linget, a spokeswoman for France's trade body that represents French lingerie and knitwear, said Chinese manufacturers have become tougher on payment, schedules and volumes since the closure of plants in the downturn of 2008/2009 gave those that remained a stronger bargaining hand and allowed them to pick and choose their customers.

"Chinese companies prefer (lingerie) orders coming from the U.S. because they are less complicated than European ones as U.S. brands use more basic designs and need bigger volumes than European brands," Linget said. "So Chinese manufacturers have become less keen to work with Europeans and have tightened their terms."

She said some brands also found that manufacturers in Eastern Europe, Tunisia and Turkey expressed more interest in taking part in the elaboration of the manufacturing process than their Chinese counterparts.

The shift is also to some extent a by-product of a deliberate and centralised Chinese government policy. Asia's No. 1 economy wants to keep moving up the value chain into manufacturing that require skills and technologies.

"In the latest 5-year plan, Beijing aims to retain only those high value-added manufacturing industries and that brings up cost as a whole," said Paul Tang, chief economist at Bank of East Asia.

Asia remains the European branded fashion industry's manufacturing powerhouse, representing 75 per cent of sourcing in 2012, according to a study by the Institut Francais de la Mode.

And between January and September last year, the value of orders from China rose 8 per cent from a year earlier to 23 billion euros, the study said, still dwarfing even the bigger players among the new breed closer to home, such as Morocco, where orders grew 10 per cent to 1.7 billion euros.

But the study noted that French fashion and lingerie brands had developed a strong interest in working with Bulgarian manufacturers, and that more than a quarter of all French lingerie is now made in Tunisia and Morocco.

It also highlighted Ukraine as a hotspot, with big brands including Hugo Boss, Quiksilver and FCUK while in Romania, they included Harrod's, Zara and C&A. In Belarus, big clients were Calvin Klein, DKNY and Next while in Moldova they were Dolce & Gabbana, Guess and Armani and Cavalli.


Crouched over their sewing machines in a brightly-lit factory in eastern Tunisia sit dozens of women in blue uniforms, carefully stitching bras and lingerie that might have been made by workers in China but for this trend.

The factory, in a industrial zone near the city of Sfax, employs 700 workers and makes lingerie and swimwear for La Perla and other brands.

At other tables, factory workers check finished bras in white and cream lace for defects before sorting them into yellow and grey crates for packaging. The clatter of sewing machines bounces off the white walls.

Manager Michel Demurs worries about the cost of raw material and the impact of last year's Arab Spring, which he says has discouraged some clients, but if the trend he is part of continues, these may prove to be minor concerns, and it may not just be clothing manufacture coming his way.

Stanley Lau, deputy chairman of the Federation of Hong Kong Industries, which represents around 3000 industrialists running factories in China, estimates that production costs in China have gone up 20-30 per cent over the past two years.

He says the country remains very strong in basic manufacturing with formidable supply chains and industrial clusters in regions like the Pearl River Delta, but competition is warming up.

"Foreign investors are already not treating China as the only choice, they make other considerations. In the past they would only think about China as a place to set up a factory, but now there are four or five choices for them ...They will consider other factors like proximity to market, labour, the supply chain, in making such decisions."

So how far west might the factories move?

"We've seen some enterprises set up factories in Detroit," says Lau. "You can see that this has become a trend."

How Samsung smartphones took on Apple

When Samsung Electronics rushed its first smartphone to market in a panicky response to the smash-hit debut of the Apple iPhone, some customers burned the product on the streets or hammered it to bits in public displays of disaffection.

Complaints ranged from dropped calls and a clunky touchscreen to frequent auto rebooting and a dearth of applications.

"It was just awful," said Kim Sang-uk, 27, who bought the Omnia in late-2009 just before starting his first job. "I just wanted to throw it away, but couldn't because I was on a 2-year contract. It was the kind of phone where you'd say 'no', even if someone gave it to you for free."

Samsung Mobile President JK Shin admitted it was a tough time. The company had seen a 1 trillion won profit in its telecom sector in the first quarter of 2010 halved in the following quarter after Apple Inc's latestiPhone took the market by storm.

"We were facing a really serious crisis," Shin said later.


Yet on the 9th floor of Samsung Electronics headquarters in Seoul housing the mobile division's design center,Lee Minhyouk said he was not feeling the heat. Samsung Mobile's vice president for design and his team were already working on its next smartphone, the Galaxy, and this would be truly a worthy opponent to the iPhone.

Samsung has sold 44 million Galaxy units since its launch in June 2010 on its way to displacing Apple last year as the world's top-selling smartphone maker. Its success evolved from the Omnia, said Lee, who at 40 is the company's youngest senior executive.

"Without Omnia and Samsung's previous models, there would have been no Galaxys. There's a design link among these products," he said in an interview at his office. "They shouldn't be viewed as fragmental design. They share our deep deliberation on technology, colour and design language."

Samsung's chequered entry into the smartphone market is emblematic of the South Korean conglomerate's strengths and weaknesses.

Its strategy has always been to be the "fast executioner", the first in the market with a copycat product when a new opportunity is presented. But it is not known as a great innovator or a company like Apple that can literally create a new market with an iconic product.

To become a truly innovative company, Samsung needs to explore the art, as well as the science, of what it does, critics say.

"Samsung is like a fantastic soap maker," said Christian Lindholm, chief innovation officer of service design consultancy Fjord based in Finland. "Their products get you clean, lathers well. However, they do not know how to make perfumes, an industry where margins are significantly higher. Perfume is an experience. Perfume is meant to seduce, make you attractive and feel good. You love your perfume, but you like your soap."

Designing something people can love is an art, which requires risk taking and is based more on experience than data. "Samsung needs to learn to lead more. They analyze all creativity to death, they lack self confidence," Lindholm said.

"Korea has to leap into the experience industry," she added. "I think they have only five years before they are the new Japan, outmaneuvered by the Chinese who are quickly learning the soap business."


Lee's office atmosphere and his comments seem to reinforce an image of a company whose culture leans more to evolution than big-bang creationism.

His design sanctum looks much like any other Samsung department, a Dilbert sprawl of desks and cubicles with framed aphorisms from the founding family on the walls: "Be with Customers" and "Create Products that Contribute to Humanity" and also this one: "Challenge the World, Create the Future".

The office may lack the exotic art, exercise balls and creative toys of Silicon Valley decor, but Lee and his team are borrowing some start-up techniques for tapping the design muses.

Lee, who has acquired the moniker of "Midas" for his golden touch with the Galaxy series, has travelled toBrazil's Iguazu Falls and the ancient city of Cuzco in Peru for inspiration. Samsung sends the design team on such trips across the world to stoke their imaginary fires.

Images or emotions they pick up on these trips can be "naturally expressed in design languages or lines and colours", said Lee, who started out designing cars for Samsung's failed auto joint venture with Renault in the 1990s.

The design process can also be more mundane, he adds.

"Designing is just part of your life. You study, do some research on future trends and experience stuff you haven't done before. All this stuff interacts to create a new design."

If money was the answer to innovation then Samsung Electronics would certainly rank among the best in the world. Samsung spent 10 trillion won on research and development in 2011.

Indeed, the annual Bloomberg BusinessWeek survey of most innovative companies ranks Samsung 11th on its list of top-50 most innovative companies, though it trails local rival LG Electronics in 7th and Sony 10th.

Part of Samsung's design philosophy is to leverage the conglomerate's ability to manufacture inhouse the components in its products, including microchips and flat screens - an advantage over Apple for instance, which has to outsource most of that.

Samsung readily acknowledges it has yet to attain Apple's innovative spark. And Lee concedes he is no match - yet - for Jonathan Ive, the genius designer behind the distinctive look and feel of Apple's range of phones, tablets and other must-have consumer gadgets.

By most accounts, Ive's success at Apple stemmed from his close personal relationship with Steve Jobs - a classic marriage between gizmo-maker and entrepreneur.

Lee, who said he has never met Ive, has a more corporate relationship with top managers at Samsung. He believes, however, that paradigmatic breakthroughs are a matter of the right product coming at the right time.

"I might not be at (Ive's) level yet, but I believe Samsung will produce such iconic products one day. It's not just effort that makes it possible for a new product to be a massive hit. It also has to be timely, and technology should be ready to make a certain design a reality."


That Samsung might eventually wind up with some Apple aptitude has to worry company executives at its Cupertino, California headquarters.

Samsung and Apple are locked in an escalating global patent battle, as they jostle for top position in the booming smartphone and tablet markets. Apple fired the first salvo in April last year, arguing Samsung had "slavishly" copied its iPad and iPhone. Since then both have taken legal action against each other in several countries claiming patent infringements.

Lee takes personal affront at the copycat charge.

"I've made thousands of sketches and hundreds of prototype products (for the Galaxy). Does that mean I was putting on a mock show for so long, pretending to be designing?"

"As a designer, there's an issue of dignity. (The Galaxy) is original from the beginning, and I'm the one who made it. It's a totally different product with a different design language and different technology infused."

And a different marketing approach. While Apple has a simple product line-up for the iPhone and iPad, Samsung has bombarded the market with varieties of the Galaxy, the Wave phone, which uses Samsung's own 'bada' platform, and most recently with a phone-tablet.

Lee sees no harm in this tweaking-rather-than-innovating approach, saying it plays to the company's corporate strengths.

Samsung's vertically integrated structure allows it to use prototype components and new technology developed elsewhere in the company in the design lab. The company has overseas design labs to help uncover consumer trends in the various global markets in which it competes.

Designers have to be integrators, researching user behaviour, discovering what's happening in the market, as well as searching for a unique aesthetic, Lee says.

"As a designer, my job is to blend new functions and technology with aesthetic beauty, as far as possible."

"There are different teams studying new technology trends, working on future design trends and Samsung's own design identity, and they're all regularly exchanging ideas with designers."


Lee's latest project - a follow-up to the Galaxy model called the Note - is a mini-tablet and phone, with a throwback stylus. Although it looks huge compared with a standard phone, its pinpoint apps and high definition screen should please those using it for video and gaming.

The phone-tablet - or phablet - has sold more than 2 million units since its October launch, and was a crowd pleaser at the annual Consumer Electronics Show in Las Vegas in January.

Lee said the design risk with the note was "breaking a taboo" about keeping handsets small enough to fit easily in your hand.

"But smartphones are more about entertainment. The Note was created by simply breaking that taboo and focusing more on the new functions that smartphones require."

Handsets are now Samsung's biggest earner - bringing in 8.3 trillion won in operating profit last year - and the group's confidence has grown in tandem with its fattening patent book - it registered over 5,000 patents last year alone.

"We were told so many times until the early part of last year that Samsung is not good at software. We're not hearing that as often any more," Samsung Chief Executive Choi Gee-sung said at the CES event in Las Vegas.

Late last month, Choi went further and told reporters at the world's biggest annual mobile show in Barcelonathat Samsung would not unveil its new Galaxy model at the Mobile World Congress for fear of rivals copying it.

Yet there's not one software engineer or designer among the 17 Samsung Fellows, Samsung Group's inhouse equivalent of the Nobel prize winners to reward those making a significant contribution to its success. Lee hopes his time will come.

"I'm confident that one day Samsung will make a product that defines our time, and I hope it's one of mine."

Wednesday, March 21, 2012

Why has India become the world's top arms buyer?

India has replaced China as the world's largest arms buyer, accounting for 10 per cent of all arms purchases during the past five years, a Swedish research group said.

India purchased some $12.7 billion in arms, 80 per cent of that from Russia, during 2007-2011, according to the Stockholm International Peace Research Institute (SIPRI). China's arms purchases during that time were $6.3 billion, 78 per cent of which came from Russia.

India has tried, but failed, to create a sizable domestic manufacturing industry for weapons or even basic military goods, while China has increased production of defence supplies. About 75 per cent of India's weapons purchases came from imports during 2007-11, said Laxman Kumar Behra of the Institute of Defense Studies and Analysis, a government-funded research organisation.

Some analysts in India attribute the failure to create a domestic defence industry to government involvement. "India's public sector is very inefficient and the private sector is by and large kept out of arms production," Mr Behra said.

"We lack long-term vision," and a culture of research and development, Mr Behra said. "The government keeps on forming one committee after the other but there is hardly any implementation" of the committee's recommendations, he said.

In a recent article in The Economic Times, Uday Bhaskar, a retired commodore and leading strategic analyst, also criticized India's weapons procurement policy.

"More than 60 years after becoming a republic and 50 years after the debacle with China, the opaque Indian defence production establishment does not produce high quality clothing and personal inventory items like boots, let alone a suitable rifle for a one million army, or tanks and aircraft."

Russia, the world's No. 2 weapons supplier in recent years after the United States, sold $7.8 billion in defence supplies in 2011, and $40.8 billion from 2005 to 2011. India bought about one-third of the supplies.

India's dependence on Russia is a holdover from the Cold War era, when the two were close allies.

South Korea was the second-largest arms importer from 2007 to 2011, with $7 billion in purchases. Pakistan and China followed, each accounting for about five per cent of the world's total arms import during the five-year period, SIPRI said.

India's import of major weapons increased by 38 per cent from the 2002-2006 period to the 2007-2011 period. India's main acquisitions over the past five years were 120 Sukhoi and 16 MiG-29 jet fighter aircraft from Russia and 20 Anglo-French Jaguar fighters.

India recently finalized a deal for 126 multi-role fighter aircraft with French defence contractor Rafael, in a deal worth $10 billion.

Sunday, March 18, 2012

Why Narendra Modi is India's Most Loathed and Loved Politician?

Narendra Modi is on the cover of TIME this week in South Asia. Modi is the most polarizing politician in India, rarely gives interviews and is a possible future prime minister, but it bears repeating that putting Modi on the cover is not an endorsement. Researching and eventually interviewing Modi was, however, fascinating, and yielded several surprises.

The road to his office in Gandhinagar, a smooth, featureless four-lane highway, held the first one: Modi ordered the demolition of about 120 small Hindu shrines to make room for it, despite vehement objections from his Hindu nationalist allies. Modi may be portrayed as an ideologue, but he is more complicated than that. “He’s the only leader in the country who would be able to destroy a temple and get away with it, and still be called acceptable in Hindu politics,” says Tridip Suhrud, a social scientist based in Ahmedabad.

Modi’s reaction to my questions about his childhood was also surprising. He didn’t romanticize Vadnagar, the town where he grew up. He had little to say about his “very average family,” whose entire house, he says, could fit into the chief minister’s office. He left home at 17 to join the RSS, so he doesn’t have the polish of those politicians educated in elite institutions, but his English was nearly flawless, and he clearly believes in the power of the individual to educate, improve and reinvent himself. “I have never gone to college,” Modi says. “But books were my best friends.”

Most of the story weighs the two sides of the central paradox of Modi’s rise: for some, he will always be the man who presided over the 2002 anti-Muslim violence, and there are millions who will never forgive him and hope that he will eventually face criminal charges. (Modi has always denied any wrongdoing, and said he did the best that he could to protect the people of his state.) For others, 2002 is a distant memory, and Modi is fully rehabilitated as a paragon of good governance and effective administration. Those may seem like two irreconcilable halves, but spend any time in Gujarat, and both are simultaneously visible.

I first met Virendra Mhaiskar, CEO of the road building company IRB, for example, while researching a story on infrastructure in India. “Mr. Modi is looked upon with different lenses in different parts of the world,” Mhaiskar told me. He recalled submitting a $42 million bid to complete a section of Ahmedabad’s excellent bus rapid-transit system. The entire bidding process was done online — no cups of tea with mid-level bureaucrats, no photo-ops with local politicians. “Even today, I don’t know who the mayor is,” he says.

It’s possible to find similar sentiments even among Muslims. “What happened in Gujarat 10 years back was the darkest phase in the history of Gujarat,” says Mohsin Sheikh, 56, an artist who lives in the Muslim enclave of Sarkhej in Ahmedabad. “I am hopeful that the victims will soon get justice. At the same time, I think that everyone should try to forget what happened a decade back and move on. Gujarat’s development is benefiting not just one community but all the people of Gujarat, irrespective of caste and religion.” That’s the argument that Modi will have to make if he ever wants to win national office: that economic development is more important than court verdicts or compensation, and that he can deliver growth and prosperity for everyone.

With the Congress Party-led coalition facing wide criticism for corruption and ineffectiveness, Modi’s chances look good. But he will also have to overcome opposition within his own party. During a decade as chief minister, he has earned quite a few enemies. “He believes that if you really want to do certain things, you cannot waste time in discussions and compromising,” says Ghanshyam Shah, a political scientist in Ahmedabad. Those who challenged him, including ministers in his own cabinet, were shut out, and Modi refused to allow them to stand for election on BJP tickets. One faction split off into a new party; another group defected to the opposition. By the end of 2006, Modi had effectively replaced the entire political leadership of the state with those loyal to him. “In Gujarat, the BJP became Modi – one voice,” says Shah. “Anyone who had a different voice had no place within the party.” That approach has left Modi alienated within his own party, but he’ll need the BJP machinery to actually run a national campaign. Even if he doesn’t become prime minister, Modi offers a glimpse of what India might be like if it became, as some of its critics wish, a little more like China. He represents a new kind of Indian politician — democratically elected but authoritarian in style and spirit. “The future belongs to him,” says Suhrud. “The future belongs to that kind of politics.”

Saturday, March 17, 2012

Surprise at India's assembly polls heralds a new kind of leader

Akhilesh Singh Yadav came through New Delhi this week for a victory lap of sorts, more than a week after he upended Indian politics. He met with many of the country's top leaders, accepting their congratulations, before he returned later in the week to India's largest state, Uttar Pradesh, where he was sworn in as new chief minister. Everywhere Mr. Yadav went, the irresistible scent of power followed.

Grown men flocked to him, plying him with bouquets of flowers and boxes of sweets, bending to touch his feet, pressing to be near him. The display of deference is a ritual of Indian politics, yet in a country governed by old men, Mr. Yadav represents something new: At 38, he is now India's youngest chief minister, overseeing a state with more than 200 million people, more of a country than a state.

"People have a lot of hope in me, that I can do something good," he said in an interview this week, as his cellphone buzzed with messages.

In a country where the public hunger for change is palpable, yet where politics often seems unchangeable, Mr. Yadav is suddenly, unexpectedly, a symbol of a new generation, featured on newspaper front pages and magazine covers, with photos of him riding his bicycle on campaign trips, as well as tidbits about his college affinity for the hard-rock band Metallica, his passion for soccer and accounts of his "love marriage."

The election in Uttar Pradesh, conducted in stages in February, with the results announced this month, was supposed to coronate India's better-known new generation leader, Rahul Gandhi, the heir to the fabled Nehru-Gandhi political dynasty, who made the state election a test of his popularity and political franchise. He failed to deliver, with voters instead endorsing Mr. Yadav.

Now all Mr. Yadav has to do is lift up the poorest state in India.

Like Mr. Gandhi, Mr. Yadav is the scion of a political family, if one rooted in the grittier, bare-knuckle traditions of Indian politics. His father, Mulayam Singh Yadav, is the founder of the regional Samajwadi Party, which drew support from Muslims and some of the lower Hindu castes, before falling out of favour in 2007.

The senior Mr. Yadav served three times as chief minister, but he oversaw an administration marred by corruption, as many party workers and officials were drawn from the ranks of toughs and mobsters. Even this year, half of the lawmakers elected from the Samajwadi Party had criminal cases pending against them, a pattern repeated in most parties competing in Uttar Pradesh.

What also made the party seem out of step were some of the positions espoused by the elder Mr. Yadav, who once opposed the use of English and computers as affronts to traditional Indian culture and village industries. To an aspirational young India, English and technology are the tools of upward mobility, a point not lost on the younger Mr. Yadav as he began to change the direction of his father's party.

"India has changed a lot," he said. "You see the amount of mobile phone penetration. It is huge here. People are slowly learning how to use computers. They want to move forward."

After a boyhood in Uttar Pradesh, Mr. Yadav attended an engineering college in southern India before graduate school in Sydney, Australia, where he studied environmental engineering and tasted the wider world.

"There was a lot of development in Australia," he recalled. "I had never seen this. It was a totally different world for me."

He returned to India and soon met the woman he wanted to marry, even though her family was from a different caste and background, in a country where most marriages are still arranged. "There was a little hesitation," Mr. Yadav recalled of his family's reaction, but he persisted in what is known as a "love marriage" until his family consented.

He and his wife, Dimple, were married in November 1999, and three months later he was elected to the lower house of Parliament. He was 26, one of the youngest members of his incoming class, but he remained mostly out of the political limelight until his father lost power in Uttar Pradesh. The son then gradually assumed a bigger role in the Samajwadi Party, becoming the state president in 2009.

In this year's race, Mr. Yadav did not initially attract much attention in an election framed as a showdown between two of the country's most powerful leaders, Mr. Gandhi and the state's incumbent chief minister, Mayawati, who uses one name. But Mr. Yadav began working the state, riding his bicycle for 120 miles to lead a "yatra," or march. He also adroitly repositioned his party to appeal to the modern sensibilities of the state's growing number of urban voters: He promised to distribute free tablet computers to students and hammered away at a positive message in what became a dirty political fight.

To combat his party's reputation for lawlessness, Mr. Yadav required the party's legislative candidates to submit applications and undergo vetting, even the party's established power brokers. He vetoed several candidates with criminal records and elevated candidates with clean reputations, including an academic from the state capital, Lucknow, who would win in an upset.

Mr. Yadav was careful not to forget his roots, though. He usually insisted on speaking in Hindi during interviews on India's English-language television channels, even though he speaks very good English. He also made a point to be accessible to voters, journalists, almost anyone, admitting that he loved glad-handing and meeting people.

It made a stark and appealing contrast to Mr. Gandhi, who is rarely accessible. While Mr. Gandhi arrived at rallies in helicopters, Mr. Yadav, the local boy, travelled on a bicycle or a customized campaign bus, stopping at villages for smaller gatherings.

"I found that cycling was a better way to connect with people rather than having large rallies," he said. "I was able to meet everyone."

Yet the scale of his party's victory surprised even Mr. Yadav. Analysts had predicted a split vote and a coalition government, possibly through an alliance of the Samajwadi Party with the Congress Party. But led by Mr. Yadav - and the political organization oiled by his father - the Samajwadi Party won a stunning 224 seats in the state assembly, a comfortable majority that meant a coalition partner was not necessary.

Then the only question was who would be chief minister, father or son. When the younger Mr. Yadav was given the job last week, the Samajwadi Party, once dismissed as a relic of India's old politics, suddenly possessed an altogether different ingredient: excitement and buzz.

"I'm quite happy and quite excited," Mr. Yadav said. "But the responsibility is big. This is a state, of course, but this is a country, population-wise."

At a news conference after his swearing-in this week, Mr. Yadav got an early taste of the pressures and challenges of running India's poorest but biggest state, as reporters peppered him with questions about his agenda and asked why many of his father's cronies still held positions of power.

"Our priority will be unemployment, the farmers and law and order," he said, smiling, as he noted that his party could no longer just act as an indignant opposition.

"From today onward, the responsibility is ours," he said.

Or, more precisely, the responsibility is his.