International Business

PRESENTATION ON NEWS DATED 18 TH JULY 2011

Group members
y Megha Kamdar y Amit Tripathi y Balaji Morye y Viraj y Vaishali Mehta

Indonesia Seeks Indian Investment in Infrastructure and Food Sector (FDI) (Global economy)

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Indonesia, world's fourth largest market, offers ample of business opportunities for India especially in the areas of infrastructure development of roads, ports, and food processing sector said Lt Gen (Retd) Andi M Ghalib, Ambassador of the Republic of Indonesia, New Delhi. While interacting with the industry members at a Luncheon Meeting organised by the Confederation of Indian Industry (CII) in Chennai today (18th july , 2011), Ghalib urged the Indian industry to explore investment opportunities in Indonesia, taking advantage of its proximity, good political relations, natural resoruces, 240-million strong market, and strategic location. Earlier, JN Amrolia, Chairman, International Networking Forum, CII Southern Region in his welcome remarks noted that India and Indonesia had many similarities in terms of culture, democracy, population, external policies of non-alignment, etc and complimentaries for economic development.

y Citing news reports Galib said that among the top 100 rich people in the world,

ten are from India. And India has the market with about 350-400 million strong consumers with huge buying power and added that y India and Indonesia has signed over 32 MoUs, out of which 18 are business related. y the current bilateral trade between India and Indonesia is estimated at $ 13 billion, which is expected to achieve the target of $ 25 billion by 2015.
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Ambrolia said that beyond trade, the two countries can forge a strategic partnership in addressing the challenges of climate change and creating an equitable world economic order.

y The official said that steps were being taken to soon introduce direct flights

from Garuda, the national airline of Indonesia, to connect major Indian cities in the southern region, including Chennai with Jakarta, Indonesia's capital and tourist destinations like Bali. Currently passengers have to fly via Singapore or Malaysia to reach Indonesia.

Traders may not benefit from wheat export (Global economy)

y India imposed the ban on wheat exports in 2007 to stabilise y

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domestic prices and contain food inflation in the country. The government move to lift the four year-old ban on wheat export is unlikely to make a major impact on domestic prices as Indian prices are not at parity with global prices. Traders feel that the best parity in export of wheat will come for Rajkot traders where the prices are ruling at Rs 1,100 to Rs 1,110 at mill delivery. "Traders in Kota and Indore are also expected to benefit as distance from these markets to Kandla port will be less. However, for traders in Uttar Pradesh's wheat growing belt of Bareilly and Shahjahanpur, it will not be at parity owing to increased wheat prices at Rs 1,200 to Rs 1,220 per quintal excluding transportation cost," said a Mumbaibased market trader who added that major destinations would include South Africa, Dubai and SAARC countries.

y In 2010 wheat production touched 82.4 million

tonne and rice production at 95 million tonne. y As on June 1, the country's stock of wheat and rice stood at 65.4 million tonne and 37.8m million tonne respectively, according to the Ministry of Consumer Affairs, Food and Public Distribution. Domestic prices are stable and there is no excitement of export as international prices are weak

Australian dairies eyeing Indian market (Indian economy) (Agriculture)

y Australian milk processors & New Zealand

companies could earn handsome profits by marketing their products in India, which is said to be facing shortages of up to three million tonnes a year. y Indias National Dairy Development Board (NDDB)has forecast milk demand at 180-200 million tonnes by the end of 2020.

y Fonterra Co-operative Group, New Zealand had carried

a feasibility study of a dairy joint venture with Indian Farmers y Fonterra is partnering with the Indian Farmers Fertiliser Cooperative and Global Dairy Health to complete a feasibility study on a joint dairy project. y The trio hope to establish a pilot farm for 3,000 cows, set up one or two dairy farms in India at a reported cost of $40 million & NDDB is supportive of the deal. y Fonterra plans to continue exporting dairy and dairy products to India worth $200 million it has been shipping over the last few years.

y A planned free-trade pact between India and New

Zealand by March 2012 will help the co-operative get access to direct customers in the country. y Indias import taxes on milk are also high, between 20-60 per cent.

Rice exporters now look at Kakinada as key sourcing belt (Indian economy)(Agriculture)
y double-polished parboiled rice with five per cent broken content is

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available within 100 km of Kakinada port today at about Rs 17,000 a tonne. Adding various expenses of around Rs 3,500 towards packing, transportation, clearing and forwarding, bank and insurance charges, port labour, etc would take the total cost to Rs 20,500 or $461 a tonne. Inclusive of $14-15 margin, five per cent broken parboiled rice from India is exportable at $475 a tonne, free on board at $480-495 from Vietnam, $510 from Pakistan and $510-540 from Thailand. Indian exporters may also be able to ship out white rice with 25 per cent brokens sourced from near Kakinada at Rs 16,000 a tonne. This rice would be exportable at $450 a tonne, which is below $460500 price of Thai and Pakistan origin and around the $425-455 range from Vietnam.

y But the biggest worry for the Government is the possibility of rice meant y

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for the public distribution system (PDS) being diverted for exports. If the rice, instead of being bought from the market at Rs 16,000-17,000, can be sourced from the PDS at Rs 10,000 or below, there is a huge killing to be made from exports at the current world prices. To prevent this, the Empowered Group of Ministers EGoM has proposed fixing a minimum export price (MEP) of $400 a tonne for non-basmati rice The proposed $400 MEP is expected to curb the temptation' for traders to source PDS rice that can then be exported at super-competitive prices. Besides the MEP, the EGoM has proposed allocation of a maximum quota of 12,500 tonnes for each exporter within the overall 10 lt to be allowed. The quota would be only against irrevocable, confirmed letters of credit, with the exporter also required to furnish bank guarantee for 10 per cent of the shipment value.

Suzuki signals rift with VW over partnership (Indian economy)(Automobile)

y Relations between Suzuki Motor Corp. and Volkswagen AG have soured on

their multi-billion-dollar partnership.

VW's purchase of a near-20 percent stake in Suzuki for $2.5 billion in December 2009 was welcomed by investors who expected Volkswagen to gain an inside track into Suzuki's leading small-car technology, while Suzuki would have access to Volkswagen's hybrid and other advanced technologies that it would not be able to afford on its own. y Numerous reports since late last year have suggested Volkswagen was looking to bring Suzuki, Japan's No.4 automaker, under its control.
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Suzuki Executive Vice President, Harayama said that :- It was made very clear when we tied up with Volkswagen that we did not want to become consolidated, and that we would remain independent,

And also said Volkswagen had classified Suzuki in its annual report as a company consolidated under the equity-accounted method over which it could have "great influence." "The two companies' sizes differ vastly in size, so maybe with the passage of time they get the misguided notion that they have brought Suzuki under the VW umbrella," the outspoken 81year-old CEO wrote in the blog, published on July 1.

Volkswagen, Europe's largest automaker, has ambitious plans to overtake Japanese rival Toyota Motor as the world's No.1 player by 2018. y On Monday, Volkswagen responded to Harayama's comments by saying it would not encroach on Suzuki's autonomy.
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"Volkswagen and Suzuki are and will remain two independent companies. No increase of Volkswagen's Suzuki stake has been agreed upon," he said in comments provided to Reuters by his spokesman.

y Thank You