Jan. 15 (Bloomberg) -- India, Australia and New Zealand will be included in a 16-nation Asian trading bloc, said Ong Keng Yong, Secretary General of the Association of Southeast Asian Nations, a move blocked a year ago by China.

``There's no question now about whether India, Australia and New Zealand are in or out,'' Ong told reporters today at the opening of the second East Asian Summit in Cebu, the Philippines. ``They're already in.''

The free-trade area would include countries with economic output of $9 trillion and a combined population of 3 billion people.

This year's East Asia Summit has been marked by a sense of concord compared to the first meeting in Kuala Lumpur in December 2005, which ended in discord when the 16 nations couldn't agree on the size of a proposed free-trade zone in Asia.

``India and China are the powerhouse economies in Asia and the world, so it's fitting to include both of them in such a trade bloc,'' said Peter Drysdale, a professor in Asia-Pacific relations at the Canberra-based Australian National University. ``If this trade proposal is accepted and endorsed, Asean will become a more significant group representing a whole range of economies.''

In 2005, Japan backed a free-trade plan that included all 16 nations. China wanted a 13-nation bloc, excluding India, Australia and New Zealand.

Since then, China's relations with both Japan and India have improved. President Hu Jintao went to India in November, the first visit by a Chinese head in a decade. Hu said he wanted to ``increase mutual trust'' and signed 13 agreements. Shinzo Abe, Japan's prime minister, visited Beijing in October to repair ties damaged by visits by his predecessor, Junichiro Koizumi, to Tokyo's controversial Yasukuni shrine.
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Jan. 17 (Bloomberg) -- India's Sensitive Index climbed to a record. ICICI Bank Ltd. and State Bank of India led the advances as investors bet a sustained growth in the economy will boost the banking industry.

``As long as industrial growth continues to remain strong we are very comfortable with banking stocks,'' said R.K. Gupta, who manages $66 million at New Delhi's Credit Capital Asset Management. ``Bank stocks are directly linked with the industrial growth rate.''

The Bombay Stock Exchange's Sensitive Index, or Sensex, rose 16.61, or 0.1 percent, to 14,131.34 at the 3:30 p.m. local-time close. The S&P/CNX Nifty Index on the National Stock Exchange lost 4.05, or 0.1 percent, to 4076.45.

ICICI Bank, the nation's biggest lender by market value, rose 26 rupees, or 2.7 percent, to 985.75. State Bank of India gained 13.5, or 1.1 percent, to 1,222.75.

India's industrial production expanded at the fastest pace in 11 years in November, the Central Statistical Organization said on Jan. 12.

Shares of Reliance Industries Ltd. rose ahead of its third- quarter earnings report tomorrow. The stock rose 2.8 rupees, or 0.2 percent, to 1,349.8.

``There is speculation in the market that the results will be good and they may announce a stock split,'' Gupta said.

Satyam Computer Services Ltd., India's fourth biggest software maker, rose after Wipro Ltd., the nation's third-largest, said profit surged 40 percent. Satyam rose 3 rupees, or 0.6 percent, to 508.75. Satyam will report earnings on Jan. 19.
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Andy Mukherjee

Tuesday, January 23, 2007

In McKinsey & Co's assessment, "if Chinese banks lend too freely, Indian ones don't lend enough."
This is evident in the conspicuous absence of any Indian lender from what may be the country's deal of the year: the contest to buy the stake of Hong Kong's Li Ka-shing in a Mumbai- based mobile-phone operator.

Indian billionaires Anil Ambani and Gopichand Hinduja are in the race for Hutchison Essar. So is Vodafone Group's Arun Sarin. Whoever wins, it is certain that very little of the US$12 billion (HK$93.6 billion) or so that Li may get for his 67 percent holding will come from a homegrown Indian bank.

Ditto for Tata Steel's US$9.2 billion bid for Britain's Corus Group. In November, Tata raised US$1.45 billion from ABN Amro and Standard Chartered. State Bank of India, the country's biggest lender, was not in the picture.

Indian banks are simply too small to back large global acquisitions. The reason that they are emaciated has a lot to do with the government, which has stunted the nation's banking system by using it as the state's own ATM.

All that may be about to change.

The government of Prime Minister Manmohan Singh gave bankers a glimpse of perestroika this month by giving up its control of the "statutory liquidity ratio," which requires banks to invest at least 25 percent of their deposits in public debt and other low- risk securities approved by the central bank.

It seems the government no longer wants to coerce banks into financing its budget deficit. The state, which owns 70 percent of the banking system, is prepared to jostle for funds with companies and individuals.

The Reserve Bank is now free to decide the pace at which the market for resource mobilization will become a truly level field with free competition.
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By Sumit Sharma

Jan. 23 (Bloomberg) -- State Bank of India, the nation's biggest financial-services firm, said third-quarter profit declined 4.5 percent on higher provisions and rising costs. Shares dropped as much as 4.5 percent.

Net income fell to 10.65 billion rupees ($241 million) in the three months ended Dec. 31, from 11.15 billion rupees a year earlier. That was lower than the median estimate of 11.77 billion rupees in a survey of five analysts by Bloomberg News.

State Bank of India, which has 100 million customers, and ICICI Bank, HDFC Bank, raised their deposit and lending rates last month after the central bank told them to set aside more cash as reserves to help contain accelerating inflation. State Bank raised its prime lending rate by half a percentage point to 11.50 percent from Dec. 27 and earlier raised the rate it pays depositors to attract funds to meet growing loan demand.

``With the liquidity squeeze and a higher cash reserve ratio, the cost of raising funds through deposits is going up, and that's what we're seeing now,'' said Navneet Munot, who helps manage the equivalent of $4.1 billion in Indian stocks and bonds at Birla Sunlife Asset Management Co. in Mumbai. ``This will change once we see the pricing power slowly returning back to the lenders.''

Deposits grew 11 percent as of Dec. 31 to 4.40 trillion rupees from a year earlier. The cost of deposits rose to 4.57 percent from 4.52 percent a year earlier. This was contained because low-cost deposits as a proportion of total deposits rose to 43.29 percent from 40.85 percent, the bank said.

The bank, which is 59.7 percent state-owned, increased the rate it pays on deposits on Dec. 11 by between 25 basis points and 75 basis points to attract more deposits.

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WASHINGTON, Jan 25 (Reuters) - India has chalked up excellent growth but should take care to stop booming credit and asset markets from causing the economy to boil over, the International Monetary Fund said on Thursday.

"Vigilance is needed to guard against any potential risks of overheating," the IMF's executive board said in a regular review of India's economic outlook.

Price/earnings "ratios are now high relative to other countries and India's recent past. Meanwhile, real estate prices continue to grow at a rapid clip on the back of a credit boom," the IMF said in a statement.

India's main index stock market index <.BSESN> rose 47 percent in 2006, while housing prices in major cities have nearly doubled in the last two years.

But on the whole, the IMF said the economic news reflected a very solid achievement, as India notched its fourth consecutive year of growth above 8 percent.

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Jan. 29 (Bloomberg) -- India faces the threat of accelerating inflation, the central bank said, suggesting borrowing costs in the world's second-fastest growing major economy after China may be raised this week.

``Underlying inflationary pressures remain,'' the central bank said today in a report in Mumbai before its monetary policy statement due Jan. 31. ``Preemptive monetary and fiscal measures along with the moderation in fuel prices could have helped to some extent in containing inflationary expectations.''

Governor Yaga Venugopal Reddy will raise the Reserve Bank of India's overnight borrowing rate by a quarter-point to a five-year high of 6.25 percent, according to 13 of 17 analysts in a Bloomberg survey. The increase would be the fourth in the key rate in the past year aimed at pushing inflation toward the central bank's 5 percent to 5.5 percent forecast by March 31.

``There is a case for the central bank to raise interest rates,'' said Shuchita Mehta, an economist at Standard Chartered Bank in Mumbai. ``We haven't seen credit growth decelerate, prices remain at elevated levels and growth is strong.''

India's key wholesale price inflation rate stood at 5.95 percent in the second week of January after reaching a two-year high of 6.12 percent the previous week. The price index of manufacturing products is at the highest since May 2005 as record loans growth and the fastest salary increases in Asia spur demand for cement, cars and other factory-made goods.
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Feb. 5 (Bloomberg) -- India's government asked state-run banks to hold interest rates on mortgages, easing concern the central bank's decision to boost a key rate will drive up installments of home buyers.

``I've requested the banks and they've decided to hold the rates at the current levels,'' Finance Minister Palaniappan Chidambaram told reporters in New Delhi today after a meeting with heads of India's state-run lenders.

The Reserve Bank of India on Jan. 31 raised a key interest rate for the fifth time in a year to contain inflation. It doubled the provisions banks have to make for real estate, credit card and personal loans and borrowings against shares from 1 percent to 2 percent to cool accelerating asset prices and curb defaults.

India's finance ministry also asked state-run banks to slow loans to ``the four sectors which were identified as risk- prone'' by the central bank, Chidambaram said.

The Reserve Bank of India is trying to cut defaults on personal loans and credit-card debts and steer lending to productive sectors amid concerns of ``overheating'' in the $854 billion economy. Commercial bank loans rose 30 percent in each of the past three years, according to central bank data, a record pace that helped property prices to double in two years.

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Feb. 6 (Bloomberg) -- ICICI Bank Ltd., India's biggest by market value, raised its benchmark lending rate by one percentage point to 14.75 percent, the second increase since December.

The bank, which has one-third share of lending to individuals for purchase of houses, cars and other durables, said the floating rate on home loans has been raised by one percentage point to 11.75 percent.

ICICI Bank will pay 125 basis points more on its fixed deposits on maturity of five years on an amount of 100,000 rupees ($2,267) or less. One basis point is one-hundredth of a percentage point. The revised rate will be 9.5 percent compared with 8.25 percent, it said. The new rates will be effective Feb. 9, the bank said in a statement faxed from Mumbai.

ICICI Bank raised its lending rate after the Reserve Bank of India, the country's central bank, on Jan. 31 raised the key interest rate at which it lends overnight by a quarter point to a four-year high of 7.5 percent, making it more expensive for banks borrowing from it.

The central bank has raised rates five times over the past year to reduce the availability of money and contain the inflation rate that accelerated to a two-year high of 6.12 percent in the week ended Jan. 6.

ICICI Bank last raised its lending rate by half a percentage point effective Dec. 18. It raised the home loan rate to 10.75 percent from 10.25 percent and its benchmark lending rate to 13.75 from 13.25 percent.

Expanding Loans

About 68 percent of ICICI Bank's loans are to individuals to purchase houses, cars or other durables. The bank's loans rose 42 percent in the three months ended Dec. 31 to an outstanding 1.8 trillion rupees.

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Feb. 8 (Bloomberg) -- India's government approved share sales in four state-run companies, reviving an asset-sale program that was suspended last year after opposition from coalition allies.

The Cabinet Committee on Economic Affairs approved the sale of 5 percent each in National Hydroelectric Power Corp. and Power Grid Corp., and 10 percent of Rural Electrification Corp., finance minister Palaniappan Chidambaram said in New Delhi today. The power companies are not publicly held. The government will sell 4.9 million shares of Bharat Earth Movers Ltd., amounting to 13 percent of the maker of excavators, Chidambaram said.

The share sales will help finance improvements in health care and education and create jobs in villages.

``The decision shows the government is serious about economic reforms,'' said N.R. Bhanu Murthy, an economist at the Institute of Economic Growth in New Delhi. ``I don't expect much opposition as the government is selling only a small stake.''

National Hydroelectric Power, Power Grid and Rural Electrification will each also sell a 10 percent holding consisting of new shares, Chidambaram said.

Shares of Bharat Earth rose 33.2 rupees, or 2.8 percent, to 1,218 rupees at the 3:30 p.m. close on the Bombay Stock Exchange.

In 2005, the government decided not to sell stakes in the so-called ``navratna'' companies after the communists opposed a proposal to sell shares in companies such as Bharat Heavy Electricals Ltd., India's biggest maker of power equipment. Also suspended last year were plans to sell stakes in National Aluminium Co. and miner and power producer Neyveli Lignite Corp.

``We have consulted the Left parties on the proposed selling of stakes in the companies,'' Chidambaram told reporters in New Delhi. ``It's not a standalone case of disinvestment.''

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By Pooja Thakur

Feb. 9 (Bloomberg) -- Shares of Unitech Ltd., India's largest real-estate developer by market value, soared 26,869 percent during the past three years. Anant Raj Industries Ltd., a competitor, leapt 39,548 percent.

Both have dropped at least 5 percent from peaks in November and December and further losses may lie ahead. The highest interest rates in four years, tighter lending requirements and seven share sales this year are hurting real-estate stocks. Those companies had rallied as a property boom pushed apartment prices in southern Mumbai to near-Manhattan levels.

``Property stock valuations are approaching bubble territory,'' said Parameswara Krishnan, who manages $150 million at DNB Nor Asset Management in Chennai, India. ``We should see some correction.'' He said he is avoiding real-estate shares.

Real estate-related stocks last year accounted for six of the top 10 performers in the BSE-500 index, the broadest measure of India's stock market. Three of the six are down this year and just one is among the top 10. Three, Mahindra Gesco Developers Ltd., Parsvnath Developers Ltd. and Peninsula Land Ltd., are in the 10 worst.

Mahindra Gesco, among the first to set up an industrial park in South India, has fallen 22 percent in 2007. The shares had surged 121 percent last year. Parsvnath Developers is down 21 percent after jumping 163 percent in 2006. Peninsula Land, which has developed commercial properties for U.S. companies such as MetLife Inc., dropped 19 percent this year after rising 127 percent last year.

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Feb. 11 (Bloomberg) -- Hindalco Industries Ltd., India's biggest aluminum producer, agreed to acquire Novelis Inc. of Atlanta for more than $3.4 billion in cash to gain sheet mills that supply can makers and car companies.

Hindalco will assume $2.4 billion of Novelis' debt and will complete the deal in the second quarter, Chairman Kumar Mangalam Birla said at a press conference today in Mumbai. Novelis board members said they support Hindalco's offer of $44.93 a share, a 17 percent premium to the stock's Feb. 9 closing price.

Acquiring Novelis will provide Aditya Birla Group's Hindalco with access to customers such as General Motors Corp. and Coca-Cola Co. Indian companies, fueled by accelerating domestic growth, are seeking acquisitions overseas to add production capacity and find markets for their products. Tata Steel Ltd. spent $12 billion last month to buy U.K. steelmaker Corus Group Plc.

``The trend for Indian companies now is to look westwards, acquire companies and establish themselves as multinational companies,'' J. Venkatesan, who oversees $1.5 billion of Indian assets at Sundaram BNP Paribas Asset Management Co. in Chennai, said before the announcement. ``Investors will want to know what kind of benefits will accrue to Hindalco in the long run.''

Shares of Novelis have doubled since Jan. 25 on speculation the unprofitable company may receive a takeover offer. Novelis fell 2.5 percent to C$45.07 a share on Feb. 9 on the Toronto Stock Exchange. Mumbai-based Hindalco Industries, almost unchanged this year, fell 1 percent to 173.25 rupees on the Bombay Stock Exchange on Feb. 9.

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Feb. 15 (Bloomberg) -- India's inflation jumped to the highest in more than two years, adding pressure on the central bank to increase interest rates.

The key wholesale price inflation rate rose to 6.73 percent in the week ended Feb. 3, the highest since Dec. 11, 2004, from 6.58 percent in the previous week, the Ministry of Commerce and Industry said in New Delhi today. Analysts expected 6.58 percent.

Record economic growth, boosted by the fastest increase in bank loans in more than three decades and higher salaries, have stoked prices of agricultural and manufactured products. India's central bank this week unexpectedly increased the amount of cash lenders have to aside to cover deposits for the second straight month to curb loans growth and inflation.

``Inflation is constantly surprising markets on the upside,'' said Shuchita Mehta, an economist at Standard Chartered Bank in Mumbai. ``There is a need to keep liquidity tight within the banking system, given concerns on the rapid expansion of credit.''

Prime Minister Manmohan Singh's government, which faces seven state elections this year including in the country's northern state of Uttar Pradesh that sends a seventh of all lawmakers to federal parliament, today cut prices of diesel and petrol for the second time in 2 1/2 months to rein in inflation.

``Any cut in input prices like petrol and diesel should have a moderating effect on inflation,'' Finance Minister Palaniappan Chidambaram told reporters in New Delhi today. ``We have moderated inflation in the past, we will moderate inflation this time too.''
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Feb. 21 (Bloomberg) -- In 1999, Mumbai-based Pantaloon Retail India Ltd. consisted of five Western-style clothing stores in five cities. Revenue for the chain was 1.35 billion rupees a year. Kishore Biyani, Pantaloon's owner, had ambitions to grow much larger. All he needed, he says, was the financing to expand. Then, a Mumbai firm called ICICI Venture came to him and, in exchange for a 7.5 percent stake in the company, invested 43 million rupees.

Today, Pantaloon is India's biggest publicly traded retailer, with 140 department stores and hypermarkets in 32 cities and revenue of 19.3 billion rupees for the year ended on June 30.

Biyani, 45, calls ICICI's investment a turning point. ``We were nobody at that time,'' he says. ``If someone recognizes you, the outside world starts viewing you very differently. Your power to raise money increases.''

ICICI Venture and ICICI Bank Ltd., the financial institution of which it is part, have been Pantaloon's corporate partners ever since. Though ICICI sold its stake in the company in 2003 -- recouping five times its investment -- the bank still lends Pantaloon money and issues co-branded credit cards to its shoppers. Last October, ICICI Venture invested 1.2 billion rupees ($27.3 million) in Home Solutions Retail India Ltd., a new Pantaloon subsidiary that sells furniture, hardware and paint.

India has emerged in the past decade as the world's second- fastest-growing major economy; it expanded at a rate of 9.2 percent for the quarter ended on Sept. 30, trailing only China, at 10.6 percent. Middle-class consumers are driving India's boom.

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Feb. 27 (Bloomberg) -- India's government may spend as much as 60 percent more on ports, power plants and roads in its next budget, allowing companies to cut costs and help damp the fastest inflation in two years.

Finance Minister Palaniappan Chidambaram will also probably cut import tariffs to make products cheaper in the budget for the year starting April 1 in New Delhi tomorrow. Chidambaram presented his first budget in 1996, when India's economy was half its current $854 billion size.

Prime Minister Manmohan Singh, facing political pressure over rising prices that are eroding the spending power of India's poor, last week asked state chief ministers for their help to curb inflation. Improved infrastructure may encourage more companies to follow in the footsteps of Nissan Motor Co. and Renault SA, which are investing in factories in the world's second-fastest growing major economy.

``If the government gets it right on inflation, the country can look forward to sustained high growth,'' said Robert Prior- Wandesforde, an economist at HSBC Holdings Plc in Singapore. ``Removing infrastructure bottlenecks should improve the productive potential of the economy, so that it can sustain demand growth without running into inflationary difficulties.''

India's benchmark inflation rate climbed to 6.73 percent this month as record economic growth boosts demand for farm and factory products. Gains in consumer prices paid by farmers are at an eight-year high of 8.94 percent, while price increases for urban dwellers are the most in six years.
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Feb. 28 (Bloomberg) -- India, the world's second largest producer of wheat and rice, banned futures trading in the two commodities to curb the fastest inflation in two years.

Wheat and rice are traded on the nation's three commodity exchanges including the Multi Commodity Exchange of India Ltd., in which Fidelity International Ltd. owns a 9 percent stake.

``Exchanges have been told not to launch new contracts in rice and wheat,'' Anupam Mishra, director at the Forward markets Commission, the commodities market regulator, said today by phone in Mumbai. ``Trading can continue in existing contracts.''

Rising prices of farm and factory products have become a liability for Prime Minister Manmohan Singh's government as it faces state elections this year. Political parties including the communists, which support the ruling Congress party, have said futures trading in staple have stoked inflation.

``If all constituents demand a ban in futures trading, we will have to succumb to their demand,'' Agriculture Minister Sharad Pawar said in New Delhi on Feb. 21. ``Trading in futures is not responsible for the increase in farm commodity prices.''

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Domestic inflation is rising rapidly and the central bank has been tightening policy. Money growth is already slowing sharply, which typically heralds a slowdown in Indian's business cycle. With the P/E ratio at 22 (among the highest globally), stocks offer very little valuation cushion to protect against deteriorating monetary conditions and slowing growth. More technically, the advance/decline line for the Indian stock exchange has peaked, which typically serves as a warning signal for a rollover in share prices. Banking issues appear most vulnerable as they are directly exposed to rising interest rates and the ensuing slowdown in credit demand. Bottom line: long only investors should stay clear of Indian stocks, while hedge funds should watch for shorting opportunities.

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By Cherian Thomas

March 2 (Bloomberg) -- India's inflation slowed for a second week, beating expectations, as cuts in fuel prices and import tariffs made farm and manufactured products cheaper.

The key wholesale price inflation rate slowed to 6.05 percent in the week ended Feb. 17, from 6.63 percent in the previous week, the Ministry of Commerce & Industry said in its weekly inflation report released in New Delhi today. Analysts had estimated the inflation rate would be 6.25 percent.

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March 14 (Bloomberg) -- Shipping Corp. of India Ltd., the nation's biggest shipping company, plans to buy 60 vessels for as much as $3 billion to meet rising demand for transporting goods in the world's second-fastest growing major economy.

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March 19 (Bloomberg) -- Toyota Motor Corp., the world's second-largest automaker, plans to build a new plant in India and to sell small cars in the country for the first time.

``We need to go into that kind of segment,'' Atsushi Toyoshima, Toyota's managing director in charge of India, said on March 15. ``Without that, Toyota can't be a substantial player in the market. That's very clear.''

The automaker has just 0.7 percent of India's passenger car market as it only sells Corolla and Camry sedans, costing about twice as much as the country's average car. It plans to introduce smaller models as it seeks to win a 10 percent share of a market likely to grow 15 percent annually for the next 20 years, according to Toyoshima.

``To succeed in India, a small car is critical,'' said K.K. Mital, who manages 1.75 billion rupees ($40 million) as chief investment officer at New Delhi-based Escorts Asset Management. ``A sedan as the heart of the market is quite a while away.''

Toyota has boosted its share of India's car market from 0.06 percent in 2003, when it first set out its goal of getting a 10 percent share by 2010. The Toyota City, Japan-based company has a 20 percent share of the utility-vehicle segment with the Innova.

The automaker hasn't decided where it will build the new plant, which smaller models it will sell in India or when, Toyoshima said in an interview at the company's only factory in India, near Bangalore in the south of the country.

The carmaker's passenger car sales fell 22 percent in the 11 months ended February from a year earlier to 6,530, according to the Society of Indian Automobile Manufacturers. Sales of its Innova and Prado vehicles gained 17 percent to 32,166.

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March 26 (Bloomberg) -- Indian Prime Minister Manmohan Singh said his government would resolve disputes over land acquisition that threaten to delay projects including steel ventures by Arcelor Mittal and South Korea's Posco.

Mittal and Posco have announced plans to spend $21 billion on plants in India to tap rising steel demand. Construction work has been delayed because farmers and villagers have refused to give up their land for the ventures.

``There are issues pertaining to land alienation and displacement of people,'' said Singh in New Delhi today. ``We will address them to the satisfaction of all.''

Delays in allocating land and mining permits may undermine India's efforts to attract more overseas investment even as the economy may expand at a record pace of 9.2 percent. The country expects $12 billion in foreign investments in the year ending March 31. China, which began opening its economy 13 years before India, got $60 billion in overseas funds in 2005.

Mittal agreed to build a $9 billion plant in Orissa, Malay Mukherjee, a member of the group management board, said Dec. 21. Mittal in October 2005 announced a $9 billion, 10 million-ton-a year plant in Jharkhand state, which neighbors Orissa.

``Progress is slow. We've land identified, we've mines identified but there is a lot of progress to be made,'' Chief Executive Officer Lakshmi Mittal said in New Delhi on March 25.

South Korea's Posco, the world's third-biggest steelmaker, said last month it won't start building the $12 billion plant until it has at least three-quarters of the 4,000 acres (1,619 hectares) of land it needs in Orissa.

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March 31 (Bloomberg) -- Tata Power Co., India's second- biggest utility by sales, agreed to pay $1.3 billion for a 30 percent stake of two coal mining units in Indonesia to secure supplies of the fuel.

PT Bumi Resources, Asia's third-largest coal miner, will sell stakes in PT Kaltim Prima Coal and PT Arutmin Indonesia, Dileep Srivastava, Bumi's head of investor relations, said today in an e-mail from Jakarta.

Chairman Ratan Tata is expanding the group's 96 companies, which control about 3 percent share of India's $854 billion economy, to build a global brand and spread investment risks. Analysts say the latest buy, aimed at securing coal supplies, maybe expensive for a $222 million profit-making company.

``Tata Power is clearly overpaying,'' said Madhukar Sheth, a stock trader at Amax Network Pvt. Ltd. in Mumbai. ``The current valuations suggest that the investment will yield about 5 percent return, which is nothing in an inflationary economy like Indonesia's. Tata Power stock may not react favorably.''

Tata Power's acquisition comes with an entitlement to purchase 10 million metric tons of coal from one of the mines, securing supplies of the fuel for its power plants coming up on India's west coast. The new plants are part of Tata Power's $4 billion expansion plan to double power generation capacity to more than 4,500 megawatts.

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April 5 (Bloomberg) -- India's inflation remained above the upper limit of the central bank's target for a 16th straight week, adding to pressure for further increases in borrowing costs to contain prices.

The key wholesale price inflation rate was 6.39 percent in the week ended March 24 from 6.46 percent in the previous week, the Ministry of Commerce & Industry said in a report in New Delhi today. Analysts forecast inflation at 6.25 percent.

Faster-than-expected gains in prices may make it harder for the Reserve Bank of India to achieve its goal of inflation of between 5 percent and 5.5 percent by March 31. India's 10-year bonds headed for the biggest weekly decline in almost two months on concern the central bank will continue to tighten the amount of money in the banking system to curb inflation.

``Monetary policy needs to be tightened,'' said Robert Prior-Wandesforde, an economist at HSBC Holdings Plc in Singapore. ``The accelerated pace of tightening in recent months reflects the central bank's increasing anxiety about inflation data and recognition they have fallen behind the curve a bit.''

Reserve Bank Governor Yaga Venugopal Reddy on March 30 unexpectedly raised the cash reserve ratio, or the amount of cash lenders must set aside against deposits, for the third time since December and raised the benchmark overnight lending rate for the sixth time in 15 months to a five-year high.
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NEW DELHI (AP) -- Mouthwatering mangoes for macho motorcycles. That sounds like a fair trade. Indian mangoes will hit U.S. shelves for the first time in 18 years, while Harley Davidson motorcycles will soon be cruising India's roads, senior Indian and U.S. officials said Friday.

The U.S. banned mango imports from India 18 years ago over concerns that Indian farmers used too many pesticides.

Now, Indian farmers will instead irradiate the fruit to kill any pests, making the mangoes fit for consumption in the eyes of U.S. agriculture officials.

Lifting the ban was first agreed on during U.S. President George W. Bush's visit to India last year.

Final details were worked out in a meeting Friday of the bilateral trade forum, chaired by Nath and U.S. Trade Representative Susan Schwab.

"In a few short weeks, Indian mangoes will enter the U.S. market," Schwab said.

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April 16 (Bloomberg) -- India's rupee rose to the highest in almost nine years, the biggest fluctuation of any currency today, on speculation exporters were buying to protect earnings from further appreciation.

This month's 3.6 percent rise in the rupee erodes profit in local currency terms for Indian companies such as Reliance Industries Ltd. Finance Minister Palaniappan Chidambaram yesterday said the rupee is ``still competitive,'' suggesting more strength. Investment into India almost doubled in the quarter ended December, driving up demand for the currency.

``Sentiment is in favor of the rupee because of the strong capital flows,'' said Rohan Lasrado, a currency trader at HDFC Bank Ltd. in Mumbai. ``Some exporters, who earlier waited for the rupee to decline, may have now been prompted to sell dollars.

The rupee climbed 1.4 percent to 41.905 against the dollar as of the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. The currency rose as high as 41.85 today, the strongest since June 1998.

India is luring global funds to its stock market and overseas companies are setting up factories. Asia's fourth- biggest economy probably expanded 9.2 percent in the fiscal year that ended March 31, the fastest in almost two decades, according to the government's forecast.

The rupee is one of the top 10 gainers among the world's most-actively traded currencies this year, rising 5.4 percent. Foreign direct investment rose to $4.9 billion in the quarter through December from $2.7 billion in the previous quarter, according to government data.

The benchmark Bombay Stock Exchange Sensitive Index, or Sensex, has quadrupled since 2001, Bloomberg data show.

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April 17 (Bloomberg) -- India's Sensitive Index fell, reversing a two-day rally. Infosys Technologies Ltd. led software exporters lower after the rupee climbed to a nine-year high against the dollar, potentially crimping export earnings.

``The strengthening rupee has become a matter of concern for exporters,'' said Soumendra Nath Lahiri, who helps manage about $3.9 billion in stocks at DSP Merrill Lynch Investment Management in Mumbai. ``Earnings will be hurt if the rupee continues to gain.''

The Bombay Stock Exchange's Sensex slid 88.54, or 0.7 percent, to 13,607.04. The index climbed 4.4 percent over the past two days. The S&P/CNX Nifty Index on the National Stock Exchange fell 28.40, or 0.7 percent, to 3984.95.

Infosys, the nation's second-largest software exporter, fell 46.6 rupees, or 2.2 percent, to 2,081.7. Satyam Computer Services Ltd., India's fourth-biggest computer-services exporter, dropped 23.45 rupees, or 4.9 percent, to 455.9. Wipro Ltd., India's third-largest software exporter, declined 12.4 rupees, or 2.1 percent, to 574.2. Both Satyam and Wipro will report earnings on April 20.

The U.S. accounts for about 60 percent of sales of Indian software companies.

India's rupee reached 41.6450 against the dollar, the strongest since June 1, 1998, and traded at 41.6950 as of 12:53 p.m. in Mumbai, according to data compiled by Bloomberg.

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An Indian car may soon earn a parking place in history alongside Ford's Model T, Volkswagen's Beetle and the British Motor Corp.'s Mini, all of which put a set of wheels within reach of millions of customers after they rolled onto the scene. Tata Motors is developing a car it aims to sell for about $2,500--the cheapest, by far, ever made.

There is a lot riding on its small wheels. If the yet-to-be-named car is a success when it goes on sale next year, it would herald the emergence of Tata Motors on the global auto scene, mark the advent of India as a global center for small-car production and represent a victory for those who advocate making cheap goods for potential customers at the "bottom of the pyramid" in emerging markets. Most of all, it would give millions of people now relegated to lesser means of transportation the chance to drive cars.
http://finance.yahoo.com/family-home/article/102865/the-next-peoples-car

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April 20 (Bloomberg) -- India's inflation accelerated more than expected, remaining above the central bank's target for an 18th week, because of higher prices for wheat and vegetables.

The key wholesale price inflation rate was 6.09 percent in the week ended April 7, from 5.74 percent in the previous week, the Ministry of Commerce & Industry said in a statement in New Delhi today. Analysts were expecting 5.8 percent.

Inflation is being fueled by farm costs, which are rising at twice the pace of prices of manufactured products. The Reserve Bank of India may leave interest rates unchanged in its next monetary policy announcement on April 24 after increasing its key overnight lending rate to a five-year high. Inflation will be about 5.75 percent next week, Finance Minister Palaniappan Chidambaram forecast today.

``Inflation is being driven by supply-side constraints,'' said N.R. Bhanumurthy, an economist at the Institute of Economic Growth in New Delhi. ``Raising interest rates won't solve the problem of shortages in food supply. Rates have risen aggressively and demand for loans is beginning to slow.''

India's 10-year bond yield fell 2 basis points to 8.06 percent at 5:30 p.m. close in Mumbai.

``Future moderation will depend upon wheat arrival and wheat procurement,'' Chidambaram said in New Delhi today, referring to the inflation rate.

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US tycoon Samuel Zell told a gathering of Indian property executives this week it was "mental masturbation" to believe there were endless riches for investors in India's runaway housing market. Coming from a man nicknamed "the grave dancer", the warning was perhaps not that unexpected. For the developers and fund managers who were listening, however, the only question remaining was how far property prices will fall.

As the hub of India's technology boom, Mumbai has become the country's property hotspot. Prime residential prices have doubled in just two years. More Indians are buying homes and real estate is also attracting speculative investors, many of them from abroad. But in a city where half the population still lives in a slum, there is a growing feeling that the market is on the brink of a collapse.

The last time a property bubble burst in India - between 1995 and 2001 - prices slumped by up to 70 per cent. This time, a fall of 30 to 40 per cent is on the cards.

http://news.independent.co.uk/business/analysis_and_features/article2486662.ece

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April 27 (Bloomberg) -- Bharti Airtel Ltd.'s fourth-quarter profit almost doubled as the company, India's largest mobile- phone carrier, signed up 5.15 million new customers in the world's fastest-growing wireless market.

Net income climbed to 13.53 billion rupees ($330 million) in the three months ended March 31 from 6.82 billion rupees a year earlier, New Delhi-based Bharti said today. That beat the 12.31 billion rupee median estimate of 14 analysts surveyed by Bloomberg News. It was the 12th straight quarter of record profit for India's most valuable mobile carrier which has a market capitalization of $38 billion.

Sales gained 58 percent to 53.93 billion rupees, falling short of the 55.6 billion rupee estimate.

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April 28 (Bloomberg) -- ICICI Bank Ltd., India's biggest bank by market value, plans to raise 200 billion rupees ($4.9 billion) in India and the U.S. in the largest share sale by a company based in the South Asian nation.

ICICI Bank's proposal, which needs shareholder and regulatory approval, rivals that of Tata Steel Ltd., the world's sixth-largest maker of the metal, which said on April 18 that it will sell $2.4 billion of shares in India and overseas to fund the purchase of Corus Group Plc.
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May 1 (Bloomberg) -- India's exports in March grew at less than half the pace of the past year as a rising rupee hurt earnings from overseas sales of textiles, steel and other goods.

Exports rose 8.8 percent to $12.6 billion in the month compared with a 21 percent increase in the year ended March 31, the Ministry of Commerce and Industry said in a release in New Delhi today. Exports gained 7.9 percent in February.

India's central bank has allowed the rupee to appreciate 7.2 percent since March to make imports cheaper and contain inflation, which has stayed above its target for more than seven months. Exports, which make up about 12 percent of India's $854 billion economy, may slow further as the rupee had its best month in April since February 1973.
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May 2 (Bloomberg) -- Siddarth Shah spends 90 minutes on a bus making the 18.5-kilometer commute to work in traffic-snarled Bangalore, India's technology hub.

Yet Shah, 29, said he believes relief is on the way. The marketing manager at Infosys Technologies Ltd., the country's second-largest software exporter, said a $1.5 billion city railway now being built will change his life.

``The Metro will be a boon for people like me,'' he said. ``The amount of time you spend on the roads is stressful.''

Shah may be disappointed. State-owned Bangalore Metro Rail Corp. says its downtown mass-transit line -- 25 years in the planning and only the second in India -- may be overwhelmed by the time the first train leaves the station in 2011.

There already are 3 million cars, buses, trucks, motorbikes and three-wheeled taxis on the southern city's pot-holed roads. Another 1,000 vehicles are added every day as the area's growing prosperity attracts more people and gives them the money to buy cars for the first time.

By 2016, the city's population is expected to reach 8 million, putting even greater demands on an overburdened transportation system.

``We will be able to cater to 15 to 20 percent of the transportation needs of Bangalore,'' said V. Madhu, managing director of Bangalore Metro. ``That is not enough. We have to add more rapid-transport systems.''
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May 3 (Bloomberg) -- Indian Finance Minister Palaniappan Chidambaram reduced a two-month-old tax increase on cement proposed in his annual budget, to help curb inflation from a near two-year high.

Chidambaram scrapped plans to raise taxes on higher priced cement by as much as 50 percent and instead levied a 12 percent tax on sales of the building material. The revised tax was included in his budget passed by the lower house of parliament today that also reduced some nickel and iron ore duties.

The finance minister changed his budget to help Prime Minister Manmohan Singh's government meet its target for containing inflation, which has remained above 5 percent for seven months, without slowing record economic growth. Cement makers raised prices after Chidambaram's budget increase.

The replacement of dual-rate of excise levy on cement manufacturers will ``extend relief to consumers particularly when infrastructure improvement has become the top priority of the government,'' the Associated Chambers of Commerce and Industry said in a statement.

Retail prices of cement have dominated India's political landscape since Chidambaram proposed raising excise duties on the commodity by as much as 50 percent in the annual Budget. Trade Minister Kamal Nath said on March 24 irrespective of rising costs, manufacturers have promised a one-year price freeze to help the government tame inflation
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May 8 (Bloomberg) -- Indian Railways, Asia's oldest network, plans to borrow $15 billion from commercial banks over the next five years to build new tracks, passenger cars and modernize stations, Railway Board Chairman J. P. Batra said.

The funding is part of the state-run network's plan to spend as much as $56 billion by 2012 to meet rising demand for transportation in the world's second-fastest growing major economy after China.

Goldman Sachs Group Inc. estimates India's $854 billion economy will grow at an average 8 percent each year until 2020. That expansion will boost annual goods movement by 51 percent to 1100 million tons and passenger traffic by 31 percent to 8.4 billion a year by 2012, Batra said.

``We realize that such high growth would be difficult to sustain without adequate capacity augmentation,'' Batra, the top bureaucrat in the Ministry of Railways, said in an interview in Kyoto on May 6. ``A number of major Japanese and European banks are keen to lend money to us.''

Batra said India's finance ministry is in talks with Japan's Ministry of Finance to arrange $4 billion of loans to finance a dedicated freight corridor in the South Asian nation. He didn't name the banks with which Railways is negotiating for loans.

Indian Railways is building two freight tracks in the busiest routes of the country. The first will connect India's financial capital Mumbai in the west, to Delhi in the north. The second track will run between Ludhiana in the north and Kolkata in the east. The first phase of the project involves 2700 kilometers at a cost of about $6.5 billion, Batra said.

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May 7 (Bloomberg) -- Merrill Lynch & Co. and Franklin Resources Inc. are increasing purchases of Indian government debt, predicting the central bank will end 2 1/2-years of interest-rate increases.

DSP Merrill Lynch Fund Managers Ltd., a unit of New York- based Merrill, last week raised 2.8 billion rupees ($68 million) for its first Indian bond fund since 2002. Franklin Templeton India, part of the San Mateo, California-based money manager, doubled holdings of benchmark debt in one of its funds in March.

``India is now closer to a peak in interest rates,'' said Dhawal Dalal, who manages the equivalent of $1.3 billion of debt at DSP Merrill in Mumbai. ``The time is probably right for investors to start considering bond funds.''
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By Jo Johnson in New Delhi

Published: May 3 2007 10:20 | Last updated: May 3 2007 10:20

India could become the world’s fifth-largest consumer market by 2025 if it undertakes the reforms necessary to sustain average annual economic growth of 7.3 per cent, McKinsey, the consultancy, forecasts in a study released on Thursday.

India is currently the world’s 12th-largest consumer market, on a par with Brazil, whose population is one-sixth as big. It will catch up with that of Italy in 2015 and be smaller only than those of the US, Japan, China and the UK a decade later.

Although income and spending levels will treble by 2025, on a per capita basis they will still have barely caught up with those of Egypt, according to the report: “The bird of gold: the rise of India’s consumer market.

“Put another way: it will take more than a century of growth of more than 7 per cent a year for India’s per capita consumption levels to catch up with those of the US (if the US continued to grow at 2.5 per cent per year),” it said.

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May 14 (Bloomberg) -- India's monsoon, which provides water for two-thirds of the nation's farmland, may reach the southern state of Kerala eight days earlier than normal, helping farmers to plant crops such as rice, oilseed and cotton.

Rains may fall over parts of the southern-most state from May 24, the India Meteorological Department said in a statement today. The four-month rainy season typically begins on June 1.

India's 234 million farmers rely on the timing of the rainy season to plant their crops. Above normal monsoon rains may lift farm production and cool inflation that remains higher than the central bank's forecast. Agriculture output supports a fifth of the nation's $854 million economy.

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May 16 (Bloomberg) -- Partha Bose is on the move. After marrying in June, he's checking out apartments a half-hour drive from his parents' two-bedroom home in New Delhi.

``I'm more open to taking on debt than my father,'' said the 28-year-old events manager, who has lived with his parents all his life. ``Job opportunities have increased quite a lot compared to even five years back.''

The fastest wage growth in Asia and expanding career choices are helping split India's family unit. Young couples can now afford to buy their own apartments instead of sharing often- cramped family homes, eroding centuries of tradition and sometimes leaving elderly parents to fend for themselves.

The shift is fueling demand for homes in New Delhi, Mumbai and Bangalore, where prices have more than tripled since 2004. India will need as many as 10 million new housing units a year by 2030, the Manila-based Asian Development Bank estimates.

``Demand for housing will continue to be quite strong as the starting salaries of the young generation are almost triple that of a few years back,'' said R. K. Gupta, who manages $68 million of stocks at Credit Capital Asset Management Ltd. in New Delhi.

Wages will rise 14.5 percent on average in 2007, the fifth straight year of double-digit increases, according to Hewitt Associates Inc., a Chicago-based human resources company. Last year's 14.4 percent increase eclipsed that in China.

In the past, Indian customs dictated that sons brought their wives to live with their parents, leaving daughters to join their husbands' families.
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May 16 (Bloomberg) -- Billionaire Vijay Mallya's distillery group agreed to buy Scottish liquor maker Whyte & Mackay for 595 million pounds ($1.18 billion), extending a record year for international takeovers by Indian companies.

Mallya's United Spirits Ltd., India's biggest liquor maker, will acquire all the shares held by Chairman Vivian Immerman and other investors, the Bangalore-based company said in a release to the Bombay Stock Exchange today. ``The potential for premium Scotch whisky in India is enormous,'' Mallya said.

With the acquisition, Mallya can market Whyte & Mackay's W&M Scotch and Jura single-malt brands in India and China, the world's two fastest-growing major economies. Mallya, who runs an airline named after his Kingfisher beer brand, joins companies including Tata Steel Ltd. and Hindalco Industries Ltd. in making $26 billion of overseas takeovers this year. This purchase is the fourth-biggest overseas this year by an Indian company.

``Over the long-term, Whyte & Mackay is a good buy, giving the company global presence,'' said Navneet Munot, who manages $4.1 billion at Birla Sun Life Asset Management Co. in Mumbai. ``With Whyte & Mackay in its fold, United Spirits will strengthen its Scotch portfolio,'' said Munot, who owns shares of United Spirits, the consolidated spirits business of UB Group.

Shares of United Spirits, maker of the McDowell brand of Indian whisky, snapped a three-day losing streak, climbing as much as 8.2 percent. The shares rose 6.9 percent to 895.2 rupees at the end of trading on the Bombay Stock Exchange at 3:30 p.m. local time today, the biggest gain since March 6

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Concerns about foreign companies that benefit from a visa program designed to make the U.S. more competitive are taking center stage in Washington, with two senators demanding explanations from overseas users of the system. Senators Chuck Grassley (R-Iowa) and Richard Durbin (D-Ill.) on May 14 sent letters to nine foreign outsourcing companies requesting detailed information on how they use temporary work visas, known as H-1Bs, to bring foreign workers into the U.S.

Critics say outsourcing firms, including Infosys Technologies (NasdaqGS:INFY - News) and Wipro (NYSE:WIT - News), are using the visas to replace U.S. employees with foreign workers, often cycling overseas staff through U.S. training programs before sending them back into jobs at home. The lawmakers are intent on probing whether those allegations are accurate. "Supporters claim the goal of the H-1B program is to help the American economy by allowing U.S. companies to hire needed foreign workers," Durbin said in a statement. "The reality is that too many H-1B visas are being used to facilitate the outsourcing of American jobs to other countries."

In outlining the investigation, Durbin and Grassley are making details of the visa program public for the first time, including the number of visas awarded to non-U.S. companies. The nine firms, led by Infosys and Wipro, use 19,512 of the H-1B visas, or 30% of the 65,000 visas allowed each year. This indicates that Indian outsourcing companies participate more actively than previously thought, garnering for themselves visas that could otherwise go to U.S. firms. "This is information that we never had before," says Ron Hira, a public policy professor at the Rochester Institute of Technology who has studied the issue closely.
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Investor's Business Daily

James Detar

India stood on the sidelines for the past decade as the other high-flying tech industry powerhouse, China, built a world-class computer chip industry. No more.

As soon as next month, a company plans to begin building India's first chip fabrication plant, or what's called a fab. At least one other chip manufacturing plant also is likely to be under way this year.

There will be more, as many 10 manufacturing plants in all in one area of India alone, an area the developer has, in fact, dubbed "Fab City."

A leader in India's race is SemIndia, a joint venture of private investors and the state of Andhra Pradesh. SemIndia is one of the forces behind Fab City.

"We want to make this Fab City a world-class one," said Y.S.R Reddy, chief minister for Andhra Pradesh. The chief minister post is similar to a U.S. state governor.

This budding Indian chipmaking industry will, in large part, service the nation's own needs.

Sales of consumer electronics -- products such as cell phones and digital music players -- in India are expected to explode to $363 billion in 2015 from just $28 billion in 2005, says research firm Frost & Sullivan.

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May 23 (Bloomberg) -- South Korea's Posco may get an iron- ore mining license by August for the $12 billion plant in India, three years after it agreed to invest in the South Asian nation.

``We had asked the Orissa state for some clarifications and we hope the license will be granted in three months,'' said J.P. Singh, secretary at the Ministry of Mines, in an interview in New Delhi yesterday. ``The process is on.''

Construction on the 12 million ton plant, India's largest foreign direct investment, will start in October, six months later than planned, because of delays in allocating land and mining permits, Posco said on May 15. Three officials at the steelmaker's India unit were detained by activists on May 11, demanding the plant be moved to another location.

Posco said last June it will scrap the Indian investment unless it's granted exclusive access to an iron ore mine. The project would proceed ``only if we are given a captive mine,'' Jeong Tae Hyun, former deputy managing director of the India unit, said on June 22.

Orissa's government in December agreed to give Posco a 30- year lease to mine 600 million tons of iron ore, the state's steel minister Padmanabha Behera said. Additional approval has yet to come from India's central government, Behera said. The state holds a quarter of India's iron ore reserves.

India may grant companies exclusive mining rights -- so- called captive mines -- after a government review panel submits its suggestions to revamp the nation's 50-year-old mining law. The panel is scheduled to meet May 28, Singh said.

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CALCUTTA, India (AP) -- A leader of a cluster of villages whose land has been acquired for a car factory said Tuesday they would continue to campaign until more compensation was paid or their land returned.

Our campaign will go on, I can guarantee that," said village leader, Becharam Manna Tuesday, a day after villagers and policeman clashed at the site.

On Monday some 200 people in Singur, a village just northwest of Calcutta, tried to break down the boundary wall of the site where Tata Motors Inc., a division of the Tata Group, is building a small car factory on 997 acres of farmland.

Manna declined to give details of future plans, saying that would help the administration to counter them.

A Tata company spokesman in Calcutta declined to comment on the situation on Tuesday.
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May 24 (Bloomberg) -- A cacophony of horns, revving engines and squealing brakes fills Jagdish Khattar's 11th-floor office in Connaught Place, New Delhi's central business district.

The company Khattar runs, Maruti Udyog Ltd., makes half of the cars jostling on India's roads this March morning, and every automaker on the planet is fighting to add its vehicles to his traffic jam.

This year, India's 1.1 billion people will snap up vans, small trucks and cars -- especially pint-sized models -- more quickly than anyone except the Chinese, according to research firm Global Insight Inc. From 2006 through 2011, India will be the fastest-growing auto manufacturer among the world's top 20 car-making countries, New York-based accounting firm PricewaterhouseCoopers LLP says.

``Everyone is looking at India after what happened in China,'' says Ashvin Chotai, who works in London as director of Asian automotive research for Waltham, Massachusetts-based Global Insight. ``There's no other place that even comes close.'' Global Insight predicts that Chinese sales of light vehicles -- cars, trucks and vans that weigh less than six tons -- will soar 50.6 percent to 12 million by 2012.

In India, General Motors Corp., Honda Motor Co., Volkswagen AG and half a dozen other companies plan to spend at least $6.6 billion on new factories to cash in on the nation's auto lust. Fiat SpA, Nissan Motor Co., Renault SA and others are linking with local manufacturers.

All are betting on a country where 7 people in 1,000 own a car compared with 450 per 1,000 in the U.S. and 500 per 1,000 in Western Europe.
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May 28 (Bloomberg) -- India's rupee advanced to a nine-year high on speculation overseas investors will buy stocks of local companies offering shares in the coming weeks.

The currency rose for a second day, breaching 40.50 for the first time since May 1998, as global funds bought $3.7 billion more of Indian stocks than they sold this year as of May 24, surpassing $2.9 billion of purchases in the same period last year, according to data compiled by Bloomberg. DLF Ltd., a New Delhi- based real-estate developer, plans to sell as much as $2.4 billion of shares through an initial public offering starting June 11.

``The supply of dollars is far higher than demand as funds deploy money in India,'' said Pankaj Sharma, chief currency trader at state-owned Union Bank of India. ``The fact that the rupee hasn't slid after rising to a nine-year high is a clear indication the underlying sentiment is bullish.''

The currency surged as much as 0.8 percent to 40.285 against the dollar before closing at 40.5175 in Mumbai, the highest since May 19, 1998, Bloomberg data show. It had failed to breach 40.50 all of last week.

A pace of growth that is second only to China's among the world's major economies is attracting equity funds as well as foreign direct investment into India. The $854 billion economy probably expanded 9.2 percent in the fiscal year ended March 31, helping almost triple foreign direct investment to $15.7 billion, according to government estimates.

The country may attract more than $5 billion in investment in the next eight weeks as DLF and ICICI Bank Ltd. sell shares, pushing the rupee to 39 by the end of June, said Vikas Agarwal, a Mumbai-based currency strategist at JPMorgan Chase & Co.

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May 31 (Bloomberg) -- India's economy grew at the fastest pace in almost 20 years as companies lifted production to meet surging consumer demand.

South Asia's largest economy expanded 9.4 percent in the year ended March 31, the biggest gain since 1989 and more than the government's initial estimate of 9.2 percent, the Central Statistical Organisation said in New Delhi today.

General Motors Corp., Tata Steel Ltd. and other companies are increasing output in India at the quickest pace in a decade to meet soaring demand from a middle class that's swelled to the size of the U.S. population. Economic growth may start to slow after central bank Governor Yaga Venugopal Reddy raised interest rates to a five-year high to curb inflation.

``We should be prepared for a soft landing,'' said Navneet Munot, who helps manage the equivalent of more than $4 billion at Birla Sun Life Asset Management Co. in Mumbai. ``The economy should expand at about 8 percent or more.''

India's economy grew 9.1 percent in the three months to March 31, according to today's report, averaging a quarterly pace of 8.8 percent in the past two years compared with 5.7 percent in the 1990s. That's stoked demand for manufactured and farm goods and pushed inflation to a two-year high in January.

``Soft landing no longer means we are back to the days of 5 or 6 percent growth,'' said Munot.

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June 4 (Bloomberg) -- Air India, the new airline to be formed by the merger of the country's two state-run carriers, may hold an initial public offering in 2009 to help fund fleet expansion plans.

The integration of the Air India Ltd. and Indian Airlines Ltd. into a single airline, which will start operations from July, may take between 18 months and 24 months, V. Thulasidas, who has been named the chairman and managing director of the combined airline, said today. Air India is the nation's biggest overseas carrier. Indian Airlines mostly flies domestic routes.

``The benefits of the merger should start manifesting before we can go to the market,'' Thulasidas, who is attending a conference in Vancouver, said in an interview.

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