Outsourcing Education!
Topic: Other
Indian educational institutions, especially Indian Institute of Management (IIM) and Indian Institute of Technology (IIT) are bucking up to go global! IIM- Bangalore and IIT-Bombay are soon going to become the pioneering trend-setters. IIM-Bangalore Director Prof. Apte said, "We have finalised a plan to set up an international campus in Singapore or any other South East Asian country. We hope the new campus will be operational by next academic year."

Singapore University approached the Indian Institute of Technology after its partnership plans with Massachusetts Institute of Technology (MIT) got derailed. IIT officials took the offer seriously and have already signed a MoU with Singapore University on offering IIT’s prestigious M.Tech education and diploma there.

It is believed that other private educational institutions in India will also be encouraged to open facilities abroad in the near future. However, IITs and IIMs have huge brand recognition abroad and will serve as good ambassadors to begin with.

There are a lot of quirks and details that need to be ironed out before the plans become a reality. The first and foremost challenge for the institutions will be staffing and finding bright faculty members. After all the academic staff of an educational institution are the primary indicators of it’s standard. IITs have been successful in attracting first-rate academic and research talent including some who hold advanced degrees including doctorates from institutions of such repute as Cambridge and Caltech.

Retaining the best of faculty members brings up the problem of unequal compensation abroad and in IITs ashore. Obviously, because of higher cost of living, faculty members in countries such as Singapore will be paid a lot more than those in India at least in dollar value. This definitely has the potential of setting-off unwarranted rivalries between the sister campuses. Moreover it might mean that the IITs in India have a harder time retaining staff in India. They are already facing a shortage.

Attracting the brightest of students is another concern educationists have. Unless the standard of IITs intake could be maintained there is no point in going global since it will in effect dilute the brand equity thus hurting Indian students in the process. Would international students be able to compete in the same exam and come in with a similar preparation? That is yet to be seen.

If there is a difference in the standard of either faculty or students on campuses in other countries the plan will not succeed. This is partly because employers will discriminate between degrees obtained from an IIT or IIM campus in India versus one obtained outside India. Of course, educational institutions of such caliber mould and shape future leaders and often leave a permanent impression on young minds, but one should not forget that the institutions currently attract the cream of the crop to begin with. IITs and IIMs have the luxury of making their admission process more competitive than most academic institutions in the world partly because of demographic and social reasons. India’s high population coupled with the Indian middle class lust for engineering and business careers might be hard to replicate elsewhere, especially in a country like Singapore where most students choose to study abroad.

The results of this experiment are yet to be determined.

-Aish Sinha

Indian Firms, Foreign Executives
Topic: Economics & Business
Guess who runs the technology operations of India based Tata Teleservices Ltd.? An Australian gentleman named Greg Young who opted out of a senior position at Telstra Australia to work in India. Mr. Young is no longer a rarity. There are several other foreign executives especially from the Anglophone world that are being attracted by Indian companies for lucrative high-growth fast-paced careers.

According to a report in the Wall Street Journal, some Indian firms are offering salaries as high as $350,000 with fat cash bonuses that range from 1 to 3 million U.S. dollars, spread over a short period of time, equity stake as well as other perquisites such as transportation, housing and other glamorous trappings that come with being an expatriate executive.

Indian companies have a lot to gain from the international experience that such expatriate executives bring to the table. Many of the executives being hired are cognizant with the ins and outs of large multinationals and are well aware of cross-border business issues. At the same time they bring in a customer service focus that resonates with the western customers of Indian service providers. The competition for human capital is fierce and Indian companies have realized that having Americans and Australians on board is a good idea for expanding in those regions. Many of the executives are able to shuttle between India and their home country, juggling customer as well as operational issues.

Many of the executives from the U.S. that join Indian firms are looking for fresh opportunities. Successful and large U.S based multinationals have fewer markets left to expand into and opportunity for upward mobility is some times lacking. Moving to a high-growth industry in a developing country such as India adds a much needed doze of excitement to work life. Moreover, living in India translates into huge savings because of the low cost of living and the favorable foreign exchange convertibility of the Rupee.

Of course such business leaders are not alone in India. Their counterparts include other expatriates from US and Europe who work for non-Indian multinationals. Even though U.S. companies are hiring a larger number of senior Indian executives for top country manager positions, using a tried and tested American hand in establishing the operations is very common.

Foreign executives probably integrate easily in a county like India where acceptance of all faiths and ethnicities is not only the norm but the rule. For instance the Indian capital, New Delhi has a large number of Israeli expatriates working for Israeli companies operating in India. Israeli expatriates enjoy working there because they usually a have a vibrant social life, synagogues to satisfy their religious cravings and tourist destinations such as Goa for adventures! Goa has become an Israeli tourist hotspot over the years. Some travel agents even organize visits to Jewish communities in India for such expatriates.

Indian firms are ready to woo executives from non-English speaking countries as well. As some companies seek newer markets in countries such as Japan, China and France the demand for native speakers from these countries who are in touch with their culture is likely to increase.

‘Globalization’ has definitely become a buzz word in the executive head-hunting and recruiting industry.

-Aish Sinha

Outsourcing the Visa
Topic: Economics & Business
What do Irish visa applicants in Ghana and Chinese applicants of the British visa have in common? They both use services of an India based business process outsourcing (BPO) firm. VFS India Pvt. Ltd. a division of Kuoni India, a company headquartered in Mumbai is providing outsourcing services to the consular services of several embassies from U.K., Ireland, Italy, etc. T.T. Services provides similar services for the U.S. embassy and consulates in South, North and East India.

Visa processing is a multi-step process and several western countries are hard pressed for time and resources at their consular services because of the higher scrutiny of applications required in a terrorism threatened world as well as the swelling number of applicants from countries such as India. For instance, the U.S. consulate in Chennai is single handedly the largest issuer of H-1B visas (work visas) for the American government. Of course the Chennai consulate receives applications from all across South India, a region in which there is an abundance of IT professionals.

Firms like VFS India and T.T. Services help in the pre-scrutiny part of the visa application process. They make sure that all the documents are in order and check bank documents. This helps the consulates to focus on the core job of scrutiny and visa issuance.

Even though the margins in the business are not high the companies are profitable due to the sheer volume of applications. The companies have a flat fee associated with the pre-processing regardless of whether the visa is denied or granted.

Visa processing is indeed the lower end of the business process outsourcing spectrum with giants like Infosys and Wipro dominating the other end. Nonetheless, the business has a huge potential for innovative new entrants. Once the foreign consulates of the several countries that are already using the outsourcing services gain confidence in the process and the working relationship they might be tempted to use the services in other countries where a high volume of applications is an issue.

The Indian companies that already have an edge in the business because of a first-mover advantage have the potential to create and seize a large chunk of the international visa processing market. However, this would require considerable capital influx into marketing and setting up international service centers. VFS India is helping the British Government issue visas in twelve cities covering the length and breath of China by establishing its own processing centers.

The cost advantage to the foreign embassies and consular services is huge. The services of the BPO could mean reduction in the turnaround time for the visas as well. English speaking countries using the BPO services can further cut down on local staff and translators.

In the near future, the business is set to grow fast internationally and Indian firms will be at the cutting edge of this management and processing revolution. This is yet another feather in the Indian outsourcing industry’s cap and will indeed contribute in its own way to India’s growing GDP.

-Aish Sinha

A New Beginning in Taxation
Topic: Economics & Business
India on Friday introduced Value Added Taxation in 21 states. The new system of taxation will not only make the archaic tax code simpler but also help state governments prevent tax evasion thus adding to the annual tax revenues. This is potentially set to help cash deprived states.

Value Added Taxation or VAT as it is commonly known has already been implemented in over 100 other countries and it was originally pioneered in developed countries. It is a taxation method that uses the difference between the selling price of goods and the cost of buying the raw materials or the goods at the intermediary stage to which the “value is added” as opposed to the traditional tax system where only the selling price is used to compute the tax. At different stage of production the VAT taxes could be computed based on looking at the inputs and outputs or the net capital outflows and labor spending.

India’s tax system was in serious need of overhaul and there will be far less taxation classes under VAT compared to before. At present VAT is expected to be in 4 slabs: exempt, 1%, 4% and 12.5% of the turnover. All industries will be accommodated within these four slabs.

Several retail and wholesale trade organizations have decided to vehemently oppose the new taxation system and as a result several shopkeepers decided to go on strike. The demands of trade groups such as the Clothing Manufacturers’ Association of India, include the abolition of the central sales tax that will be continued in parallel at least in the near future, provide relief on the inter-state sales taxes levied on goods being moved from one state to another, and other limitations and exemptions on and from the value-added taxes. Mr Khandelwal, secretary general of the Confederation of All India Traders, warned that there would be mayhem because the government had not yet made public the VAT rules. Even though many of the industry lobby groups are critical some still believe that it would be a good idea to revamp and modernize the tax system.
Only 7 of 28 states of India have decided to go against VAT implementation and most of them are ruled by the major opposition party Bharatiya Janta Party. Ironically the BJP was in favor of VAT until it was in power. Apparently, BJP has decided to put its principles on the backburner while playing its political cards.
"VAT has been launched. We have 21 states on board and I am sure the others will join within a month-and-a-half," Ramesh Chandra, secretary of the panel overseeing VAT implementation, told Reuters.
The Government has taken a step in the right direction and it needs to be applauded. The various implementation problems and the minor differences between the government and the other parties involved could probably be ironed out once the system is rolling.

Value Added Taxation is meant to simplify and ease the tax code and not serve as a means for the contrary. Other previous forms of taxation still need to be in place for continuity and could be removed gradually.

-Aish Sinha

The Lost Tribe
According to the Old Testament of the Bible, the holy book of Jews as well as Christians, during the reign of King Solomon, the tribes of Israel split into two kingdoms, Israel in the north and Judea in south. In 723 B.C. the Assyrians conquered the kingdom of Israel and took 10 of the 12 biblical tribes into exile, where they dispersed among the nations.

In 1951 a church minister in Manipur belonging to the Bnei Menashe tribe claimed he received a prophecy from God. He was told that his people must return to their original land and the religion they came from, before the war of Armageddon. About 20 years later, some Kukis who were dissatisfied with Christianity started researching the origins of their religion and realized that they were not descended from Christians, but from Jews.

This is how almost a fairytale like story of the Bnei Menashe, a tribe in Manipur begins. The tribe believes and claims Jewish ancestry to one of the same lost tribes mentioned in the Old Testament- Menashe.

Several years back the members of the tribe appealed to the Israeli Government to grant them Israeli citizenship but they were turned down. There is reason to rejoice for the tribe since recently there request has been granted after a prolonged investigation that included DNA tests.
One of the most senior Rabbis of Israel, Chief Rabbi of the Sephardic Jews, Shlomo Amar has approved the claim of the 6000 strong tribe. He announced that the members of the tribe who have not already converted will be converted and granted citizenship to Israel and invited to return to the homeland of their ancestors. The ruling will ease the tribes' emigration to Israel from the states of Manipur and Mizoram.
According to the oral traditions of the tribe they crossed the Red Sea, Persia, Afghanistan, Tibet, China and the Himalayas in their passage to their current settlement in North-East India. Back in 1894 when some Christian missionaries came to the region and preached verses from the Old Testament to the tribal inhabitants of the area many of the learned in the tribes recognized some of the passages as having distinct resemblance to their own traditional tales. They thought that they had descended from Christian ancestors and thus readily converted to the religion. It was only in 1951 when the Church minister Tchalah claimed to have received the prophecy about their origin did they start having doubts about their ancestry. Once bible was translated to the local language in the 1970s the Bnei Meashe’s doubts were confirmed about their link to the original lost tribe of Israel.
A researcher of the Mizo tribe, Zaithanchuungi, developed the lost-tribe claims in 1981 and presented papers to various seminars in Israel. Some Israeli groups like the Amishav, now known as Shavei, which helps Jews move to Israel, supported the claim and says it has brought 800 people from the Bnei Menashe to Israel.
DNA studies at the Central Forensic Institute in Calcutta suggest that while the masculine side of the tribes bears no links to Israel, the feminine side suggests a genetic profile with Middle Eastern people that may have arisen through inter-marriage.
Whether the connection is valid or not many of the members of the tribe are indeed preparing to convert, strictly adhere to Jewish practices such as the observance of the Sabbath and eventually migrate to Israel.

-Aish Sinha

Citizenship for Taslima
Topic: Political/International
The Bangladeshi writer Taslima Nasrin who received flak from Islamic fundamentalists in her own country and elsewhere because of her famous but controversial book, “Lajja” (Shame) is seeking Indian citizenship. She holds a Swedish passport.

Taslima Nasrin used to write for a newspaper in Bangladesh on issues concerning fundamentalism and women’s oppression. Back in 1990, Islamic fundamentalists in her country staged street demonstrations and even stormed her newspaper office. They also sued her editors and publishers. She was even publicly assaulted by outraged mobs. She believes that Islamic scriptures are out of sync with a modern world and this upset Islamic fundamentalist. According to Nasrin, the scriptures are set in a different age and world. Furthermore, her book “Lajja” describes atrocities against Hindus by Muslim extremists in the riots and mob violence that were sparked in Bangladesh after the demolition of the Babri Mosque. The Soldiers of Islam issued a “fatwa” against her and the Bangladeshi government banished her. She is a recipient of the prestigious Ananda award as well as several other international awards for writing and human rights.

For the past ten years, Taslima has been living in exile in Europe and shuttles between her new home and India. She wants to settle down in West Bengal because she finds it closest to her original home in language and culture. She has written to the Home Minister, Shivraj Patil petitioning for an expedited citizenship. Indian laws currently require a minimum continuous stay of five years and several other requirements that Nasrin fails to meet. She might be a granted a permit to stay in this country for a period of five years.

It is surprising that Indian law does not have special provisions for immigration of exceptionally talented and accomplished people. If India wants to project herself as a regional power she needs to be able to absorb people persecuted in neighboring countries for the wrong reasons. This will enhance India’s image as the torchbearer of human rights in the region. There have been other celebrities such as Adnan Sami who have requested Indian citizenship in the recent past. His request was also turned down. It is ironic that illegal immigrants from both Pakistan and Bangladesh are able to pour into India without much hindrance but highly acclaimed and accomplished people have a tough time setting their foot in this country.

-Aish Sinha

Rail Budget Unveiled
Topic: Economics & Business
Railway Minister Laloo Prasad Yadav has probably never been appreciated more from politicians, businessmen and common people from all corners of the country. The occasion? He announced a populist Indian Rail Budget for the financial year 2005-06. Prime Minister Singh congratulating Mr. Yadav said that the budget envisions a modern rail network without burdening the common man.

The budget has left the passenger fares as well as freight charges untouched. The budget also announced the unveiling of 46 new passenger trains, some that would extend to the remotest corners of the country. It also has provisions for modernization of stations, tracks and infrastructure used to keep the largest and densest train network in the world alive.

A rise in freight leads to increase in costs for companies and either decreases profits and productivity or forces companies to pass on the higher costs to the end consumers leading to inflation, which currently stands at 5%. The bond market reacted positively with the yield on the benchmark 10-year bond settling on to a 6.4655 percent down from 6.4910 percent before Mr. Yadav started his speech.

According to the plans presented in the budget the Railways will raise over 30 billion Rupees in the debt markets through the Indian Railway Finance Corporation. This capital inflow will be in addition to the 72.30 billion to be received from the federal budget to cover the increase in operational costs. About 154 billion Rupees have been earmarked for improving infrastructure and passenger safety, a 5% increase from last year.

The minister has also allowed concessions for students, unemployed and farmers, a welcome change. Some of the new trains proposed in the budget include Muzaffarpur-Howrah Jansadharan Express, Bilaspur-Tirupati Express, Madgaon-Mangalore Jan Shatabdi Express, and Chennai Egmore-Pondicherry Link Passenger. Southern states have received a bulk of the trains while Laloo’s home state of Bihar will get only two new trains. Rail tickets could now also be purchased online making train reservation more customer-friendly. The Railways is even setting up a call center in Patna with arrival and departure information for all trains. Increased partnership with the private sector has also been emphasized in the budget.

The industry has termed the budget innovative. FICCI president Onkar Kanwar said that the reforms initiated will make the railways a much more customer-friendly organization. The Indo-American Chamber of Commerce appreciated the budget’s emphasis on private partnership. Some business leaders also applauded the end of the monopoly of Concur in the container movement business.

In India it is not often that Governmental budgets or plans appease both the common man as well as the private sector. But Minister Laloo Prasad Yadav has successfully managed to do so.

-Aish Sinha

The Outsourcing Boom
Topic: Economics & Business
The Indian IT and IT-enabled services industry has grown at an astounding rate of 30-60% per annum in the last two decades. From a billion dollars export industry in 1996 to 12 billion dollars in 2003, it has indeed come a long way. In 2003-04, software and IT related services export accounted for about a fifth of India’s exports making her the world’s largest outsourcing hub.

When Americans dial toll free numbers to activate their credit cards, check their bank balance or even get help for solving a technical computer problem they often reach a representative sitting in Bangalore or Noida. Not only that, large Fortune 500 companies often engage Indian software houses such as Wipro and Infosys when they determine the need for a full-size business process revamp.

Outsourcing is a term that was traditionally used for explaining the corporate practice of obtaining services for a crucial but a non-core function from an outside service provider. For instance companies could engage a law firm and thus outsource their legal department. This was practiced to cut down costs and focus on the business’ key strengths. But with the advent of information technology, internet and better telecommunication systems, outsourcing back office processes and key software development projects to “offshore” locations was made possible. India came in to the picture when the Y2K bug scare led to several American companies engaging Indian software firms for testing and fixing software. With their might proven, Indian companies surged ahead and brought more software business to the shore of India. Some of the various areas in which India has taken a global lead include call center services, e-commerce and business application development, knowledge management, data research and medical transcription. Today some multinationals in the financial services industry are even outsourcing financial analysis to India. Instead of hiring pricey financial analysts on Wall Street, firms such as J.P. Morgan Chase have setup outsourcing centers in India. Needless to say, Indian financial analysts will have access to the same information and tools that some one sitting in New York has.

The flourishing of the Indian IT industry stood on the foundations of an abundance of technically qualified English-speaking manpower, presence of several software firms that were ready to take on international opportunities and the availability of basic infrastructure such as electricity and telecommunications. The Government was involved in expanding the infrastructure base and strengthening Indian education. Also, it did not burden the software industry with license requirements and export restrictions, perhaps because of the fringe status of the industry at the time. There are several lessons to be learned from this success, especially if this success has to be replicated in other industries.

To help create export growth in other industries the UPA government will serve will if it sticks to funding the technological institutions of India that can provide industry-relevant niche education while maintaining a disciplined approach towards the development of infrastructure. The Union Budget for 2005-06 to be announced on Feb. 28 should reflect this reality.

-Aish Sinha

What?s in a name?
Topic: Other
Under former Prime Minister Atal Bihari Vajpayee, the S.K. Joshi Committee was setup to research the possibility of upgrading some existing engineering colleges to IITs. The Joshi Committee recently submitted its report and has included a list of institutions that could be “upgraded”. The committee judged institutes on the basis of different factors such as academic reputation, the number of papers published by the faculty members and the future potential for the institutes to become major forces in the Indian engineering education system. Some of the institutes that did make the cut include Benaras Hindu University’s Institute of Technology, Osmania College of Engineering, Zakir Hussain College of Engineering and Cochin University of Science and Technology.

Most states were lobbying for their institutes of higher learning to become part of the lucky pool. However, there are some who believe that these institutions should be upgraded to the status of a National Institute of Technology (NIT) and not IIT since it will dilute the “brand equity” of the IITs.

In essence taxpayer’s money and lawmaker’s time is being wasted on a trivial issue. It doesn’t really matter whether an institute goes by its own name, or is called IIT or NIT. If a university is doing well and is doing a service to the community it should have access to the Central Government’s funds much like the Indian Institutes of Technology. Being called one or another doesn’t quite make a difference.

The Government’s efforts are misguided in that it wants to support and help institutions that are already self-sufficient and are doing well. It would be a lot more helpful to take an institution that is not able to sustain itself and turn it around so that students in the area who did not have access to a local institution of higher learning could benefit.

World over publicly supported schools are not doing well- even in highly advanced and rich countries such as Germany and the United States. The universities and colleges in the former are overloaded with students- so much so that many students have to stand in classes to listen in. In the latter most public universities are supported by state budgets and because of several budget cuts across the county many universities are left fending for themselves.

Hence it would be better to give the already independent institutions research grants while pushing in the direction of self-reliance. The number of well staffed and sufficiently funded higher learning institutions in science and engineering is small in comparison to the population of India. Moreover engineering and the sciences are the chosen fields of study for a sizable chunk of the Indian population which adds to the burden of these institutions.

The need of the hour is not for selective upgrades of a few institutes to Indian Institutes of Technology but for a major overhaul plan that can revitalize the education system in general. Undoubtedly in a country the size of India even hundreds of institutes with superior infrastructure and quality education are not enough.

-Aish Sinha

Musharraf on India Tour
Topic: Political/International
Delhi born Pakistani President Pervez Musharraf was on a three-day visit to India that ended past Sunday. On Sunday he went to see the cricket match between the two nations. During his trip he also visited the famous Dargah of Sufi saint Khwaja Moinuddin Chisti where he prayed for improvement in Indo-Pak relations. Musharraf’s last visit four years ago for a summit with then-Prime Minister Atal Bihari Vajpayee failed to reach any agreements. The new trip comes at an ideal time as India-Pakistan peace talks, stumbling along since early 2004, seem to have found their footing.

Of course at the top of the Pakistani agenda is Kashmir and it is possible that the two countries might actually be able to workout at least a partial resolution to the problem. The LOC could be converted into an international border ending a long standing dispute. According to a recent poll conducted by The Times of India, a very small minority of Kashmiris want to let Kashmir become a part of the Islamic Republic of Pakistan. However, a good chunk of them would indeed prefer a free Kashmir. This is not good news for the Pakistan Government essentially because it de-legitimizes their claim on Kashmir. Since, Kashmir is currently India’s part and it might even become an independent country, it is none of Pakistan’s business.

The time has indeed come for the two nations to end worrying about a relatively small unproductive piece of land. The most basic of human wants is freedom and economic prosperity. Indians can provide for both to the Kashmiris, still left in the state of Jammu and Kashmir. However as a first move the terrorists from the state have to be purged. India should seek as much assistance Pakistan is willing to extend in wiping out terrorism from the state.

Even if Kashmir becomes a free nation it will have to rely heavily upon India, Pakistan or the international community for its sustenance. And Kashmiris once Kashmir becomes separate will not have the opportunity to come to India to find work any longer. Most Kashmiris understand this and even though they might be theoretically enthusiastic about self-determination and a Azad Kashmir, reality will force them to mass migrate to India before the separation takes place leaving much of Kashmir to a few politicians who would be happy to hold on to their corrupt and consequently wealthy offices. Even from an Indian standpoint the separation is not a viable option because India is a conglomeration of several ethnic and nationalistic groups and giving away one piece of land will lead to other freedom movements in all corners of the country. Needless to say Pakistan has nothing to gain from Kashmir either, unless of course it decided to invade Kashmir.

Ideally, India and Pakistan should both forget about Kashmir, and lay the framework for free movement of people and goods across the borders in the fashion of the European Union. Perhaps involving other SAARC (South Asian Association for Regional Cooperation) nations might be a good idea. Since India has come out as a regional superpower the onus lies on her to take the initiative and push for it. A unified free trade zone and cross-border trade, employment and tourism opportunities will create one region of super growth and similar culture diffusing all regional tensions.

-Aish Sinha

Victory of Right Over Wrong
Topic: Political/International
In the last issue of Epicure we reported on the action taken by humanitarian and non-profit activist groups based in the United States campaigning against Mr. Narendra Modi’s slated US visit. Mr. Modi was scheduled to visit a conference organized by the Asian American Hotel Owners Association, an organization dominated by Americans of Gujarati origin, many of whom own and operate a large chunk of motels and budget hotels across the United States. Mr. Modi was supposed to speak at the event as a Chief Guest.

However things started going bad for Mr. Modi when several groups representing the Indian American community and the South Asian diaspora in the United States formed a new group, Coalition Against Genocide (www.coalitionagainstgenocide.org) to protest the slated visit by the Chief Minister. The Coalition Against Genocide includes Alliance of South Asians Taking Action, American Federation of Muslims of Indian Origin, Association of Indian Muslims of America, Friends Of South Asia, Hindu Vaishnava Center for Enlightenment, Sikh American Heritage Organization, Voices for Freedom, World Tamil Organization, Policy Institute For Religion And State, Manavi (An organization for South Asian women), Indian Christian Forum and Campaign to Stop Funding Hate.

The groups did not want Mr. Modi to set foot on American soil since he was responsible for inaction during the riots in Gujarat. Perhaps Mr. Modi should have paid heed to the old adage, “Inaction is not an option.” Some even claim that Mr. Modi supported planned attacks on Muslim families in Gujarat. According to British officials who visited Gujarat after the riots, the attacks had “all the hallmarks of ethnic cleansing and the reconciliation between Hindus and Muslims is impossible while the Chief Minister (Narendra Modi) is in power.” According to the BBC “It's a damning indictment of the State Government. It says the violence, far from being spontaneous, was planned possibly months in advance, carried out by an extremist Hindu organization with the support of the State Government.”

In a petition to several senators in the United States, American Express, the sponsors of the conference as well as Chris Matthews a popular news show host in the United States, the Coalition Against Genocide said, “Mr.Modi and his state apparatus have been indicted by reputable Indian and International human rights organizations for their sponsorship of and complicity in the ethnic cleansing and pogroms against the Muslim community in Gujarat during February - March 2002 where thousands of people were killed and made refugees.”

As a result of the concrete action by the several action groups Chris Matthews withdrew from the event. And now as a result of a major success of the Coalition Against Genocide the United States revoked Mr. Modi’s business/tourist visa that he was holding since 1998. Mr. Modi was also demanding a diplomatic visa that the Government of the United States of America denied.

The Indian Government should not protest this move by the Americans. The Coalition Aginst Genocide has sent a letter to Prime Minister Manmohan Singh stating reasons for putting pressure on U.S. senators to recognize the evil crimes committed by Mr. Modi and the eventual revocation of his visa. Moreover Mr. Modi was going to the United States neither to represent India nor Gujarat.

Ordinary people, united and fighting for a just cause, can indeed make a difference. Revocation of the visa should serve as a constant reminder to Mr. Modi, Hindutva fanatics and other perpetrators of heinous acts of atrocities that people do not have short memories.

-Aish Sinha

Stopping Modi
Topic: Political/International
Narendra Modi, the Chief Minister of Gujarat is scheduled to visit Ft. Lauderdale, Florida, U.S.A in late March to attend the annual convention of the Asian American Hotel Owner’s Association (AAHOA) as a Chief Guest. However, many in the Indian American and the larger South Asian community have joined hands with activist groups in the United States such as the American Federation of Muslims of Indian Origin, Hindu Vaishnava Center for Enlightenment, Indian Muslim Council-USA, Association of South Asian Progressives and many others to protest his visit to the United States.

The Asian American Hotel Owner’s Association happens to be dominated by Gujarati immigrants from India since the Gujarati diaspora owns and operates a lot of motels in the United States. The members of AAHOA own about 40% of all motels and about $40 billion worth of real estate in the US.

Narendra Modi, of course has been reelected after the Gujarat riots in which over two thousand lost their lives- mostly Muslims while Mr. Modi conveniently remained apathetic if not encouraging of the genocide. According to Human Rights Watch, an international organization, "Mobs arrived by the thousands in trucks, chanting slogans of incitement to kill, and armed with swords, tridents, sophisticated explosives, and gas cylinders. They were guided by computer printouts listing the addresses of Muslim families and their properties. While army troops had been flown in to quell the violence, state officials refused to deploy them until after the worst violence had ended. In the weeks that followed the massacres, Hindu homes and places of business were also destroyed in retaliatory violence by Muslims." Several at the time believed that the violence was kicked off due to Muslims putting a train coach carrying Hindu pilgrims ablaze. However, according to the investigation committee report made public under the Chairmanship of Justice U.C. Banerjee, released in early 2005, the coach may have caught fire by accident.

The organizations against Mr. Modi’s slated US visit have even put together a website, www.coalitionagainstgenocide.com. Chris Matthews, a popular news show host in the United States has withdrawn from speaking at the convention because of pressure from the aforementioned groups. American Express is sponsoring the event and is also under a lot of pressure for withdrawing.

Many of the activist groups have written to the Secretary of State, Condoleeza Rice and requested her to ban Mr. Modi from visiting the United States if he already has a visa or not granting him a visit visa if he doesn’t.

According to some sources there is an action group in New York City that is requesting the American Government to detain Mr. Modi as soon as he sets foot on American soil. The group wants Mr. Modi to be tried for crimes against humanity under American law. There are provisions under American criminal law that make such actions possible. However if Mr. Modi represents the state of Gujarat he might have immunity from such legal action.

-Aish Sinha

On A Speedway to Better Highways
Topic: Other
Past Saturday the Government of India cleared the plan to upgrade an extra 4,000 km of national highways. This was decided in a Cabinet Committee on Economic Affairs meeting Chaired by Prime Minister Manmohan Singh.

Indian highway expansion plans include three phases. The first phase focuses on the Golden Quadrilateral Project that is currently in progress. The Golden Quadrilateral links the four Metros- New Delhi, Chennai, Mumbai and Kolkata. Under the project the highways are being upgraded and widened to four to six lanes. The Golden Quadrilateral is an over 5,000 km stretch. Even though the Quadrilateral project is running late, over 90% of the work is expected to be completed by year end.

The second phase of the project includes upgrading the East-West and North-South corridors. This phase is crucial for better road transportation and inter-state commerce. The target for completing the second phase is 2007. The first and second phases together will cost over Rs.650 Billion.

The third phase of the highway expansion plan will include the recently approved 4,000 km stretch as well as expansion and addition of safety features such as road-over bridges and crash barriers in other stretches of the national highway.

According to the National Highway Authority of India the total length of the national highways is an astounding 65,569 km. And even though the national highways account for less than 2% of the Indian road network they carry over 40% of the traffic. Indian roadways are a lot more burdened and consequently, are as if not more, important than the Railways. Indian roads carry 70% of all freight traffic in the country and support 85% of all passenger movement in the peninsula.

The best part about the latest expansion plan is that the government will shoulder only 40% of the financial burden. The rest will be covered by the private sector.

Back in 1999, The Government of India introduced a cess (tax) on petrol and diesel. The total revenue collected from this was set aside for Central Road Fund for the exclusive utilization for the development of a modern road network. The fund could be tapped for national highway development primarily by the Ministry of Road, Transport and Highways as well as the National Highways Development Project. Currently NHDP gets about Rs.5-6 Thousand Crore per annum for the aforementioned purpose. Apart from this other options such as market borrowing and loan assistance from international funding agencies such as World Bank and Asian Development Bank are also open.

However the benchmark of the funding mechanism is what is called Build, Operate and Transfer (BOT). BOT was initiated to encourage foreign and private participation in national highway construction and maintenance. After a concession period of up to thirty years the road is transferred back to the Government. Until the transfer takes place the private parties can recover their cost and generate enough profit to justify their investment. It is because of this novel idea that the Government today has been able to plan further expansion of the national highway network. Similar private party involvement schemes could also be established for shipyards and ports, railway stations and airports.

-Aish Sinha

A Group Going Strong
Topic: Political/International
G20, the group of fast developing twenty nations held its ministerial meeting in New Delhi past Friday. G-20 member nations include Brazil, China, South Africa, Argentina, Venezuela, Pakistan, Chile, Egypt, Mexico, Nigeria, Thailand, Philippines, Paraguay, Cuba, Guatemala, Indonesia, Zimbabwe, India and its newest member, Uruguay.

The group was holding its meeting, the first of its kind in India to prepare for the WTO discussions that will be held in Hong Kong later this year.

The group decided to back agriculture related concerns of the developing countries. One of the key demands that were voiced in the meeting included the removal of all farm subsidies in the developed nations. Farm subsidies often make it easier for local farmers to compete against exporters in countries such as India. Several European countries as well as the United States have protectionist subsidies that hurt foreign exports.

Commerce Minister Kamal Nath urging the group to pressure other countries to remove all farm subsidies said, “For many of us, agriculture provides the means to subsist and there is no room to play with a very source of livelihood. When we look at how the trade distorting practices of many countries adversely impact the livelihood of our poor and vulnerable farming communities, there is an overwhelming reason to lead these talks to an outcome to remove distortions.”

The meetings were focused on the “three pillars” of agricultural issues- export competition, domestic support and market access. Needless to say, protectionist measures such as the ones taken by the United States increase the competition for foreign players. It is already far from a level playing field since marketing and promoting goods in a foreign land is a tumultuous and expensive task for exporters in developing countries. Add to this the severe competition from domestic producers backed by export subsidies leading to the downward pressure on the prices. It adds up to an export nightmare.

Recently several countries such as India have made a special effort to support the agriculture sector. In India there have been plans whereby the Government would provide free agricultural consulting and support to the farmers. The land holding and usage patterns in India indeed demand such endeavors. Most farmers in India are often either subsistence farmers or small-scale agriculturists. Farmers working with small capital often do not have access to technological know-how. Government’s consultants could provide farmers with information on soil, climate, well-suited crops, value-addition, the best selling export-products etc.

Oxfam, a non-profit organization campaigning against subsidies, has estimated that the United States paid 3.2 billion dollars a year in cotton subsidies and spent 1.6 billion dollars on export credits for several goods. Celine Charveriat, Oxfam's head of advocacy, said the G-20's strong solidarity would put more pressure on developed countries before the Hong Kong WTO ministerial. "I think rich countries will have to respect the rights of developing countries to protect their poor farmers," she added.

-Aish Sinha

Forex Touches a New High
Topic: Economics & Business
India’s foreign exchange reserve has reached a new height. Reserves rose by a $2 billion in the week ending March 4, 2005 leading to a foreign exchange reserve of $137.56 billion. India’s reserve holdings are sixth largest in the world. This is indeed far from the desperate state of the reserve only fifteen years back when Manmohan Singh, current Prime Minister initiated economic reforms. It was also not too far back in February, 2003 that a high of $74.67 billion was much celebrated. It has jumped another 84% since that high.
India's central bank governor, Mr. Yaga Venugopal Reddy, said last month that large foreign inflows posed a challenge to exchange rate management and monetary policy. This is because the surplus of foreign capital especially the U.S Dollar can lead to the Rupee significantly strengthening against the Dollar which would in turn lead to making Indian exports abroad expensive. Since much of the increases in the foreign exchange have been due to foreign investment in the country there are often not enough corresponding imports to balance out the currency surplus.
The Reserve Bank of India is doing its part to keep the Indian Rupee trading within a 3-5% band.
One of the most important issues currently at hand is the diversification of the foreign exchange portfolio. Mr. Reddy has said that efforts to diversify the portfolio are being seriously considered and actions might be taken soon. India and other Asian economies have recently pushed for shifting away from Dollar-centric reserves since the Dollar has weakened against other major currencies such as the Euro. If reserves are maintained primarily in US Dollars there is a good chance they could gradually yet steadily evaporate. Therefore it is important especially for developing countries such as India to ensure other currencies such as the Euro and Japanese Yen are present alongside the US Dollar.
The reserves were only slightly offset by recent declines in the Indian gold reserve. Nonetheless the reserve position of India in the International Monetary Fund has increased to $1.42 billion.
News of the diversification plans of the Reserve Bank of India ignited rumors of a pooled effort of major Asian economies in moving away from the US currency. This led to increased speculation on the Dollar in the major international markets.
The strong reserve position has helped India’s credit profile and won her recent upgrades with such international rating firms such as Fitch Ratings and Moody’s. The upgrades in credit ratings send strong positive signals to potential creditors interested in buying debt securities issued and guaranteed by the Government of India. It also encourages foreign equity investors to pump in further capital into the economy.

-Aish Sinha

The Constructive Construction Plan
Topic: Economics & Business
The Commerce and Industry Ministry under Minister Kamal Nath has announced plans to allow 100% Foreign Direct Investment (FDI) in the commercial property construction business. Commercial property includes real estate and buildings for offices, hotels, malls etc. This reform is indeed timely to say the least and is meant for an industry that is arguably in most need of change. Currently, foreign investment in the construction industry, save the development of “integrated townships” is prohibited unless approved by the Foreign Investment Promotion Board which needless to say inhibits more than promotes. In regards to the plans of the ministry, Mr. Nath commented “We want incremental investment in the construction sector so that it triggers employment generation, greater economic activity, a rapid increase in built-up infrastructure and spin-off benefits for manufacturing sector.”
Mr. Nath attended the World Economic Forum where he observed the keen international interest India as an investing destination. He should be lauded for taking immediate action and opening one more avenue for foreign participants. The guidelines issued after a cabinet meeting on the subject, fixed a minimum land area for development at 10 hectares for serviced housing plots and five hectares for other construction projects. The investment would further be subject to a minimum capitalization of 10 million US dollars for 100-percent subsidiaries and 5 million US dollars for joint ventures with Indian partners.
The extra development will lead to more affordable housing and property for the common man. At the same time it will also increase the international capital flowing into the country. Some of the other countries that have greatly benefited from foreign direct investment in commercial real estate include Dubai and Malaysia. The former boasts the world’s largest man-made residential island (under construction, Palm Islands) and the latter one of the world’s tallest building (Petronas Twin Towers). Such development can have a huge positive impact on the tourism industry. Commercial property adds to the nation’s primary infrastructure and sends a positive signal to potential foreign investors in other industries. Moreover, under the table real estate cash deals that never show up on national tax books will become a thing of the past as foreign entrants will demand greater transparency and insist on well-documented agreements. The quality of construction is bound to improve since Indian builders will face new competition.
Critics of this proposal are using a trite argument that is highly misplaced. According to some on the Left this will lead to price inflation since foreign players will command a brand premium and brokers will bulk-buy property and squat on it. Well, having less development will obviously not solve the problem since there will be a lesser number of brokers who would be able to buy a majority of the property pushing the price skyward. Increased development and supplementary options will take a lot more brokers to occupy all the property, because of capital constraints, which will in turn lead to competition and drive the economic profits down. This will make the buy and hold in bulk business less lucrative edging out several of the players.
Owning and selling undeveloped land is still not allowed in India because of the undue fear of speculation in the market. Some other avenues for speculation include the equity and bond markets which have not been exploited yet. Speculation does not necessarily have evil consequences since it often makes a market more efficient. The exploitation of information inefficiencies for profits leads to less and less of the former.
The real estate and construction reforms are a step in the right direction. Even though the current reforms are far from revolutionary in nature they do indicate the Cabinet’s and Prime Minister Singh’s intentions of further liberalizing the economy and encouraging foreign investment.

Aish Sinha

Carriers South Asia Can Do Without!
Topic: Political/International
Pakistan finally received clearance from the US government for purchasing the F-16 fighter jets that it wanted for a long time. F-16s can be used for ground as well as air attack and have a range of more than 2,000 miles. F-16s are capable of delivering nuclear warheads. U.S. State Department officials said that it would improve regional security. Pakistan will order about a dozen fighter aircrafts for supposed use in the “fight against terrorism.” Pakistan is a long-time customer of the United States and bought a batch of F-16s even in the eighties. However, the U.S. Government placed sanctions on defense sales to Pakistan after the nuclear tests delaying the sale of the fighters.

President Bush personally informed Prime Minister Manmohan Singh of the sale. While India was disappointed that the rival neighbor would receive F-16s, it was mollified by the US hinting that it will be willing sell the superior F-18s to India. Mr. Bush said that Washington was responding to the Indian request for information on “multi-role combat aircraft.”

India on the other hand has traditionally bought fighter jets from old friend, Russia. On February 7 this year, the Indian Air Force announced that it will be buying 126 fighter jets. The French manufacturer Dassault Aviation and the U.S. based Lockheed Martin Corporation have long been considered front runners in upgrading the Indian Air Force. In addition to the Lockheed F-16 and Dassault Mirage 2000-5, New Delhi is also eyeing the Swedish-made Gripen fighter and the Russian MiG 29 M2. Many of the potential additions to the Indian fighter lineup were showcased in Aero India 2005, a five day international aerospace and defense exposition, the largest of its kind in South Asia.

Indian Air Force is in need of an overhaul since much of its fighter inventory consists of MiG-21s dating back from the 60’s. The MiGs are notorious for plane crashes and are nicknamed “flying coffins.”

The Indian Government is vary of buying F-16s from the United States since that would force it to rely on the Americans for future purchases of spares. This could be a potential source of conflict since the Americans might favor one nation against another in case of a war with Pakistan. Moreover, the United States is often seen as a volatile defense partner that can use the stick whenever it sees fitting.

Interestingly, both countries are seeing the American move to sell fighter jets as appeasement and judging their own good fortune and prestige based on the approvals from the American government! This is pathetic, since the U.S. government is more interested in generating revenues for its defense manufacturers than in displaying respect or solidarity for either of the nuclear rivals. Gullible countries like India and Pakistan often play to the hands of superpower salesmen. Possibly, the United States is selling the dozen F-16s to Pakistan to incite India into purchasing a hundred F-18s so that the latter will get a chance to prove her might and engage in one-upmanship against Pakistan. And no, the U.S. does not want to sell a 100 F-18s to India, because it thinks of India as a country worthy of superior defense technology but because a 100 F-18s will generate enough revenue for defense manufacturer Lockheed Martin. In fact Lockheed Martin has threatened to close down some of its fighter production facilities unless the US government to find it new customers.

India and Pakistan should both give it a little thought before buying more weapons and fighters. An arms race is the last thing we want in the subcontinent.

-Aish Sinha

BPO Industry Ready to Set Standards
Topic: Economics & Business
The Business Process Outsourcing (BPO) industry in India has been a true success story. Contract after contract India has become the back office of the world. There are literally thousands of companies in the United States that are outsourcing services ranging from call center based customer care to accounting. Much of the work needless to say is going to India. But, with greater volume of work comes greater pressure.

Outside of the United States, Indian firms are probably the only entities that have access to private information on almost every American. Indian firms have information on what Americans spend, the credit cards they use, who they call and sometimes even their criminal records. Personal information in the United States is exactly that- personal. There are several laws that prohibit companies from divulging even phone numbers of their customers without prior permission. Hospitals are not even allowed to divulge medical records to parents of non-minor children without written consent. Therefore, it is understandable why the flow of personal information from the United States to India has some lawmakers, business groups and even citizens worried about privacy.

This has pushed the industry to set high standards for itself and improve security features in use at their facilities before any red flags are raised by their multinational customers. There are already pretty stringent policies in place that restrict what employees in call center can do. For instance employees at a call center in Noida who work for a bank helping customers activate credit cards and setting pin are not even allowed to take a piece of paper inside with them. They are not allowed to write any thing while they are inside and obviously cannot bring any thing out of the office- at least legitimately.

Last week, former employees of Mphasis call center in Bangalore, India were charged with siphoning off US $300,000 from the account of Citibank customers. According to Mr. Jadhav, the Chief of the Cybercrime cell of Pune Police, “Either in goodwill or on false pretenses, they also obtained the PINs from these account holders in the course of their work." This event has caused a frenzy of new reporting on data security in Indian hands.

However, Indian lobby and industry groups such as the National Association of Software and Service Companies (NASSCOM) are taking a step in the right direction by bringing together the firms in the country and setting guidelines for personal information security. NASSCOM has planned to launch an employee registry program where information on all the employees in the industry will be entered into a central database. This will help firms in conducting background checks while hiring new employees as well as reporting misconduct to other firms in the industry. Moreover NASSCOM has also decided to implement a central All-India test for call-center qualification. The test will help the BPO companies pick the best of the crop without having to spend a great deal on recruitment and advertising thus making the whole industry a lot more profitable. The plan also has the potential of improving the industry’s margins and bottom line.

It seems that the NASSCOM is becoming more of a regulatory organization, however the regulation is self-imposed by the industry’s players. In a few years the growth in the BPO industry might start to level off but Indian companies will be so far ahead in the race that it would not be a problem. The firms could shift from merely providing outsourcing services to providing training and expert management services- setting up call centers and similar facilities in other countries. One BPO firm in India has already decided to go global by setting up call centers across the border in Karachi, Pakistan.

-Aish Sinha

Airport Upgrades A Must
Topic: Economics & Business
The Civil Aviation Ministry has announced plans of upgrading all major metro airports as well as develop others in smaller cities such as Jaipur and Ahmedabad. This is a giant leap forward for a country that once almost forgotten about its transportation infrastructure. Airports are one of the key indicators of infrastructural well being to foreign investors. As they say, a first impression is a lasting impression!

Civil Aviation Secretary Ajay Prasad said in an interview with Asian News Agency, “Unfortunately, we have been lagging behind in upgrading our ground infrastructure. The kind of investments that need to be made in airports could not be made in the last many years. We have now embarked on a very ambitious plan to upgrade very rapidly major airports of our country. What we have calculated is that in the next few years something like 40,000 crores (400 billion rupees) need to be invested in Indian airports. Now obviously that kind of money is not going to come through the budgetary resources of the government. So, one of the approaches we have adopted, is inviting private sector participation in the airports.”

Obviously Rs. 40,000 crores is no pocket change. And, this is the reason why the government has decided to go with private partnerships. Some might say that renovating and building airports should not be a top priority for the Indian government since there are other basic infrastructural problems to worry about. However, one has to realize that poverty and lack of infrastructure are part of a vicious cycle. If a country doesn’t build infrastructure such as airports it would have problems with attracting FDI. Lack of FDI would definitely translate into lesser business activities and consequently higher unemployment. And needless to say higher unemployment and poverty are what would lead the government to funnel more money into unsustainable social development programs. The only way out of this doom loop is to grab the bull by its horns.

Jakarta and other Asian cities that are gateways to countries that attract huge foreign investments have laid a lot of stress on infrastructure development centered on the airport. In Jakarta, the Soekarno-Hatta Airport is in a class of its own- well developed and superiorly managed. The route from the airport to the city center is probably better than any highway in the developed world. The highways are tree-lined and innocuously hide the villages and huts behind them. The unassuming foreign investor on a business trip would never have to come face to face with the realities of the developing world. Even though such cover-up development might seem superficial they serve as means to a higher noble goal.

Indian airports currently are lagging far behind not only the developed world and cities such as Singapore and Dubai but even to neighbors such as Karachi, Pakistan and Colombo, Sri Lanka that have newer and more welcoming airports.

A much needed facelift to the airports will not only boost foreign investment but also help India serve as a hub for trans-Asiatic airline routes boosting tourism and foreign exchange spending in the country.

-Aish Sinha

The End of Salem
Topic: Other
After the series of bomb blasts in Mumbai, notorious Abu Salem fled India for Dubai and continued on to Portugal. He was arrested there for entering Portugal on forged documents and obstructing justice. Consequently, he was detained in a Portuguese facility. Even though far from India, he still managed to operate his network remotely. Salem was in the international film distribution business and his cohorts regularly threatened producers and directors who would not give him rights to distribute their movies abroad. He even worked with film financiers and producers to help them secure capital for the next blockbuster.

Mumbai police and the Central Bureau of Investigation want him for several cases of “underworld” crime. He is a suspect in over forty cases of extortion, Gulshan Kumar’s murder, Mumbai blasts, as well as an attempt on the life of Rakesh Roshan. Indian government and the CBI had requested Portugal for his extradition but the High Court ruled that he could be extradited only if he would be tried for minor crimes. European countries often do not extradite criminals for major offense to countries such as India and the United States where death sentence is still practiced. The Indian Government assured the Portuguese that the ultimate penalty of death will not be given to Salem and appealed to the Supreme Court of Portugal. Finally, in a major victory for Indian law enforcement and CBI the highest court in Portugal recently gave a go ahead for returning Salem to India to be tried on Indian soil.

The Portuguese Supreme Court ruling comes at a time when the Europeans are becoming extremely varied of Islamic militancy within their own borders. The train bombing in Madrid, Spain was linked to Arab terrorist organizations with links to Al-Qaeda. More recently Theo van Gogh, a controversial Dutch film director was killed by a person linked to an extremist Islamic terrorist organization with cells in Europe. A wave of racism and hatred against Muslims with attacks on mosques and Muslim schools in Holland followed. In France, where Muslims account for about 10-12% of the population, the government banned public display of head gear such as scarves traditionally worn by Muslim women in the region. It seems that the Portuguese probably realized that people with violent histories such as Salem could be involved in supplying arms and providing support for violence in Europe. This might have prompted the Portuguese Supreme Court to give in to the appeal by the Indian government realizing that people such as him could be served justice in India.

It is interesting to note how the Bollywood reacts to Salem’s extradition. On one hand, those who have already suffered enough at the hands of the gangs controlled by Salem et al might be relieved, but others who have deep financial connections with the underworld might have lost their sleep. After all, Abu Salem could disclose the name of those who are closely connected to him in the industry.

The so called underworld gets a solid hand in the affairs of Bollywood only because the industry insiders use it as a source of financing, a means of extracting unpaid dues and some times even taking revenge. If the film industry swears to sticks to clean ways of doing business the days of the like of Salem and Dawood would indeed be numbered.

-Aish Sinha