Business and Economy

• An ASSOCHAM (an Indian industry association) study revealed that more than 30 acquisitions (M&A) have taken place during January 2006 and a bulk of these transactions was in the automobile and IT/ITES sector. The study pointed to several instances of such inorganic growth where companies are seeking stake or outright acquisitions worldwide to grow markets, increase production capacity, gain access to new markets, or develop expertise. The largest foreign acquisition was Tata Interactive System's acquisition of Tertia Edusoft AG in Switzerland and Tertia Edusoft GmbH in Germany. Foreign companies have been increasingly investing directly in Indian companies with Taiwan-based Sanyang Industry taking a minority stake of 11% in Kinetic Motors, Switzerland-based Holcim 14.8% in Gujarat Ambuja Cement Ltd (GACL), Malaysian Maxis Communications Berhad 74% in Aircel. The most watched M&A was the Jet-Sahara merger that would give it a 50% market share and make it the largest airline in the country.

• Nasscom (association of IT & ITES vendors) said that the Indian IT industry has reached only 10% of the world's addressable market and it would grow to USD 36 billion in 2006. Predicting a double-digit growth rate in the next four years it set of a target of USD 60 billion by 2010. The Business process outsourcing sector had only 12% of the market share. 

• The seafood exporters association is threatening to go on strike where it will stop all purchase and production of seafood and products. They are demanding a withdrawal of a planned 5% tax. The tax under dispute is for exporters whose turnover is over Rs.100 million. Increased anti-dumping charges, allegedly illegal, from the US and large-scale competition from China, Thailand, and Vietnam are cutting into their market share. Pointing to 150 "sick units," exporters say that this tax will decrease their margins and competitiveness and seeking a one-time debt relief of Rs. 7000 million. In Kerala, there are 50 active exporters with 23 who will fall into this category but they contribute 95% of seafood export from the state. The seafood exporters have had a good ride for 8 years where they enjoyed subsidies and did not pay any taxes. With the Federal Government under increased pressure on foreign policy from communists, may see economic pork-barrels like this to subsidize an inefficient industry that will benefit a few.

• The three non-communist Southern states are locked in competition to attract new investments. The latest in this race is a USD 3 billion-fabrication project that can translate into 3.6 million jobs. The Federal Information Technology Dayanidhi Maran announced that the fabrication consortium has decided to set up shop in Andhra Pradesh instead of Tamil Nadu. Maran says that the Tamil Nadu Chief Minister (CM) Jayalalithaa from a rival political party did not show active interest to get the project. Jayalalithaa says that Maran, with eye on state Government polls this summer, is playing politics. The new Karnataka CM H.R. Kumaraswamy who inherited a bankrupt, infrastructurally rickety and economically exhausted state thanks to the previous Government's apathy has vowed to get the unit back to Bangalore, the first choice. The successful Andhra Pradesh Chief Minister Y.S. Rajashekara Reddy is claims that previous rival Government, internationally acclaimed for his vision for development and implementation, did not develop the state and has promised increased infrastructural investment.

Democracy, Politics and Judiciary

• An ominous cloud over glorious developmental endorsements from various studies about Kerala is emerging with a new study from the State Planning Board. After years of communism and populist spending on non-plan expenses such as salaries, subsidies, and pensions, Kerala is spiraling towards bankruptcy. Most of its "development" was funded by state and central borrowings and its annual interest payments has gone times to 25% of its total revenue and 35% as ratio of the states gross product. The per capita debt spiked from Rs. 4090 in 1998 to Rs. 9,248 in 2003 against a national average of Rs. 6,531. The average debt to gross domestic state product is 22% to 28%. 

Environment, Health and Education

• The French Ambassador to India Gerard Dominique visited the Alang ship-breaking yard in Gujarat and said that the facilities were adequate.  He reiterated a previous offer from France to repatriate all toxic material to France. Pointing out that 5 workers of the yard have already been trained to handle toxic material, he offered to bring in French workers to handle such material. Meanwhile, Shiv Sena workers protested against the environmental group Green peace International who they said were out to “ruin India” and deprive workers of their jobs.

• Editorial: Regulate Ship Breaking Business