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Increase FDI in Defence to 49%: Assocham

New Delhi, Mar 02: The Foreign Direct Investment limit in the defence sector needs to be increased to 49 percent from the current 26 percent to facilitate the flow of investment and technological know-how, industry body Assocham has said.

"It is necessary to be self-reliant in defence production, which could be possible if FDI limit is raised to 49 percent. This will help India acquire defence technology for its increased arms production and reduce dependence on imports," the chamber said in a statement.

Since the 1991 Kargil war, India`s arms imports have risen to 25 billion dollars and would further rise to 30 billion dollars by 2012.

If the Indian economy continues to grow at current momentum, spending on defence is projected to increase to 3 percent of the GDP from the current 2.8 percent, Assocham President Venugopal Dhoot said.

Saudi Arabia and China are the next two large armament buyers in the developing world after India, which notched up defence deals valued between just 2-3 billion dollar each in 2006.

Currently about 70 percent of the Indian procurement in value terms, is from foreign sources because the Indian public sector cannot deliver in terms of quality or speed on either research or production.

Dhoot further said, FDI hike in defence would also help procurement of latest technologies as per provisions of latest Defence Offset Policy.

The offset policy is expected to bring in 10 billion dollar during the 11th Five Year Plan as every foreign company is required to spend 30 percent of the value on offsets goods or services purchased from Indian defence companies.

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ICICI Lombard wins NACIL insurance contract
2 Mar, 2008, 2154 hrs IST

MUMBAI: Insurance major ICICI Lombard has won the bid to insure the non-aviation businesses of the National Aviation Company of India Ltd (NACIL), in which state-run Air India and Indian have merged, a senior NACIL official said.

ICICI Lombard's exposure value this year is Rs 1,800 crore as compared to around Rs 1,500 crore last year, the official said, adding "intense competition was witnessed during this year's bidding

US dollar decline to dominate
2 Mar, 2008, 2048 hrs

LONDON: Currencies will be in full focus on financial markets in the coming week following the dollar's drubbing of recent days yet anyone hoping for help from policy makers to shore up the ailing greenback is likely to be disappointed.

Key meetings of European Union finance ministers and European Central Bank interest-rate setters are expected to do little to shift the status quo, while the US Federal Reserve appears dead-set on cutting again this month.

"I don't see a major change in trend in the coming week", said Lex Hoogduin, chief economist at Dutch investor Robeco. This means that gold and oil prices should maintain their record-breaking pace at least over coming days, while equity and bond investors will have to continue revaluating their holdings in light of a soaring euro and low-yielding dollar.

It may also put strains on export-oriented emerging Asian stock markets, which have otherwise started to see an increase in institutional investment flows. The dollar took many investors by surprise last week, falling to an all-time record beyond $1.50 to the euro, meaning that the 15-nation currency has strengthened around 15 per cent against the greenback over the past 12 months.

Less heralded, but by no means less significant, the so-called dollar index, which tracks the US currency against six major counterparts, hit its lowest level since inception in 1973. While many institutional investors believe that the dollar will recover some strength by the end of this year, there is no conviction that this will happen soon.

"The trend in the short term is for more dollar weakness," said Colin Asher, senior economist at investment bank Nomura. A key reason for this is that the background dynamics that have pushed the dollar lower specifically interest rate differences are unlikely to change in the next few months, let alone in the week to come.

ECB rate-setters, for example, have made it clear that they are more worried about inflation than a slowing economy. All 72 economists last week said the ECB would leave rates at 4.0 per cent when it meets on Thursday. European policy makers are also unlikely to be overly concerned about the euro because its strength makes imports cheap, putting a damper on the inflation that so concerns them.

By contrast, US Federal Reserve Chairman Ben Bernanke clearly signalled last week that the US central bank will cut rates again to stop further damage to the ailing US economy. The Fed is widely seen cutting US rates by at least 50 basis points to 2.5 per cent at its next meeting on March 18 .

This leaves currency markets hostage to a raft of US data in the coming week, including on manufacturing, services, jobs and vehicles sale which are expected to be poor overall. The question may then be "how far will the dollar fall", although Nomura's Asher noted that with the dollar already so weak a bit of a bounce cannot be ruled out.

Profit-taking and better-than-expected data can always turn things around quickly, particularly in an era of overall global market volatility. For equities this week, the weak dollar provides a mixed picture. It has little short-term impact on many US equities, which tend to be domestic in orientation, but shakes the more export-focused markets of Europe and Asia.

"It should hurt European equity markets more than it will help US equity markets," said Klaus Wiener, chief economist of Generali Investments. Stock markets, he said, will be focused on plans to rescue US monoline insurers, the firms that insure structured finance whose potential downgrading as a result of credit market turmoil threatens to spill over into other parts of the financial sector.

The volatility on currency markets, meanwhile, comes as equity markets have been rallying relatively sharply. MSCI's benchmark world stock index, incorporating US, European, Japanese and emerging market shares, is up around 8 per cent from a low on January 22, the day the Fed announced an emergency rate cut to boost the US economy.

Where a weak dollar most certainly has an impact, however, is with commodities, notably gold and oil. Because these assets are priced in dollars they rise when the currency falls as they become more attractive for non US investors.

In both cases, this has added to their already soaring demand driven prices. Gold hit a record high around $975 an ounce on Friday, leaving the psychological $1,000 milestone within sight in the coming week. Oil, meanwhile, breached a new high of $103 a barrel.

The rub is that such prices fire up inflation, making central bank decision making that much trickier. "The current inflation is due primarily to commodity prices of oil and energy and other prices that are being set in global markets," the Fed's Bernanke said.

TCS in multi-million euro tie with Nokia-Siemens
2 Mar, 2008, 0230 hrs

NEW DELHI: Networking major Nokia Siemens Networks (NSN) has signed a multi-million euro agreement with Tata Consultancy Services (TCS) to transfer its product engineering and R&D services as well as parts of the Operations and Business Software (OBS) business unit activities to India’s largest software exporter. The reassigned parts belong to the NSN development centre in Düsseldorf, Germany, including 90 employees who will be transferred to TCS as part of the agreement.

Under the agreement, TCS will provide global R&D services to Nokia Siemens Networks by leveraging its expertise in the telecom sector. The transfer of R&D capabilities to TCS is part of Nokia Siemens Networks’ overall strategy to realise synergy savings, the networking company said in a statement.

“For many years, Tata Consultancy Services has been a valuable partner to Nokia and Siemens, our parent companies. TCS brings to the table an in-depth experience in outsourcing projects and a proven track record of successfully transferring and integrating customers’ R&D personnel. This deal provides the employees in Düsseldorf with an excellent opportunity to work with international teams in a global company,” said Juhani Hintikka, head of the Operations and Business Software Business Unit at Nokia Siemens Networks.

“The agreement with Nokia Siemens Networks reiterates TCS’ capability to enhance customers’ business by leveraging our superior R&D services and strong domain. As the R&D partner for Nokia Siemens Networks, TCS will share its innovative approaches, global best practices and benchmark standards to ensure excellence.

The new regional delivery centre for telecom customers in Düsseldorf—where the transferred employees will work—is strategic to us, as Germany is a key European market,” TCS chief operating officer and executive director N Chandrasekaran said.

The integration of Nokia Siemens Networks employees would establish TCS’ local presence and strengthen its position as a global player, said PricewaterhouseCoopers partner Graham Pascoe. “This is especially important in Germany where brand recognition is key,” he added.

washingtonpost.com's Politics Blog
Wag the Blog: Clinton on Saturday Night Live (Special Sunday Edition)
When Sen. Hillary Rodham Clinton (D-N.Y.) disappeared from the campaign trail without warning yesterday, the rumor mill began churning. Had a cold or the flu knocked her down just 96 hours before the biggest votes of her political life? Did she sneak off for a clandestine courting session with former senator John Edwards (N.C.)?

Turns out Clinton had hopped a plane for New York City where she appeared in a sketch on "Saturday Night Live" -- mocking, among other things, the media's treatment of Sen. Barack Obama (Ill.), her position in the race and even her laugh?

Not a night owl and missed the sketch? Here it is:

Dow Industrials Shed 315 Points on Disappointing Economic and Corporate Reports

NEW YORK (AP) -- Stocks fell sharply Friday after a series of depressing economic and corporate reports as well as high oil prices stoked concerns about the health of the economy. The major stock indexes fell more than 2.5 percent and the Dow Jones industrials lost 315 points.
Investors were unnerved by disappointing quarterly results from American International Group Inc. and Dell Inc. And an index of regional business activity that Wall Street regards as a good indicator of a broader report due next week had its weakest showing in more than six years.

Oil prices continued to stir concern about inflation after pushing past $103 per barrel for the first time.

While stocks made sharp gains in the first three days this week even amid somewhat lackluster economic readings, the litany of concerns investors succumbed to Friday reflected the undercurrent of uncertainty that has kept Wall Street on edge for months.

"We really had to face a plethora of negative news," said Art Hogan, chief market strategist at Jefferies & Co. in Boston. "We just ran out of gas this week."

Hogan said while stocks held up admirably early in the week amid an uneven flow of economic news, they couldn't hold their gains after the latest round of weak economic signals.

The Dow fell 315.79, or 2.51 percent, to 12,266.39.

Broader stock indicators also tumbled. The Standard & Poor's 500 index lost 37.05, or 2.71 percent, to 1,330.63, and the Nasdaq composite index declined 60.09, or 2.58 percent, to 2,271.48.

For the week, the Dow lost 0.93 percent, while the S&P 500 gave up 1.66 percent and the Nasdaq fell 1.38 percent. The week's losses would have been steeper had stocks not risen early in the week on hopes many of Wall Street's credit troubles were easing and after IBM Corp. announced a sizable stock repurchase plan.

Friday's losses sent stocks lower for February, the fourth straight month of declines.

Bond prices rose sharply as stocks lost ground. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.53 percent in late trading from 3.67 percent late Thursday.

The Chicago Board Options Exchange's volatility index, known as the VIX, and often referred to as the "fear index," jumped 12.8 percent.

The dollar hit another low against the euro and slid to a three-year record against the yen. The fall in the dollar has sent prices of commodities such as oil and gold soaring.

Light, sweet crude jumped to a record of $103.05 in early electronic trading before settling down 75 cents at $101.84 a barrel on New York Mercantile Exchange.

Insurer AIG announced a $5.29 billion quarterly loss largely because of steep declines in the value of a portfolio of contracts known as credit default swaps. Such contracts pledge to cover missed payments on debt. The company's losses caught analysts off guard, as many had expected the company to turn a profit.

While each of the 30 stocks that comprise the Dow industrials showed declines, those of AIG were the steepest. The stock fell $3.29, or 6.6 percent, to $46.86.

Computer maker Dell posted a 6 percent decline in its quarterly profit, falling below analysts' expectations, and warned that its business could suffer from reduced customer spending. Dell slid 97 cents, or 4.7 percent, to $19.90.

Bill Schultz, chief investment officer at McQueen, Ball & Associates in Bethlehem, Pa., said AIG's report left investors uneasy about the prospect of further sizable write-downs of bad debt.

"Every time we get to a point where we think we've finished, another report comes out and says we're not done yet," he said.

Schultz expects Wall Street will continue to proceed with "fits and starts" until investors sense that the bad debt from faltering mortgages has been accounted for and that balance sheets are on the mend.

Some relief for the ailing bond insurance industry is on the way, though the news didn't dislodge Wall Street's glum mood Friday. Billionaire investor Wilbur Ross agreed to invest up to $1 billion in Bermuda-based reinsurer Assured Guaranty Ltd. Assured Guaranty rose $2.87, or 12.6 percent, to $25.65.

In economic news, the Chicago purchasing managers index for February came in at 44.5, a weaker reading than the 48.5 that had been expected, according to Dow Jones Newswires. The report painted a dreary picture of the manufacturing sector and is seen as a precursor to the national Institute for Supply Management report expected Monday.

A government report showed that personal spending, when stripping out the effects of inflation, stood unchanged in January. The findings brought further worries that consumers are more hesitant to reach into their wallets amid the uncertainties facing the economy.

A parade of economic worries has weighed on consumer as well. The Reuters-University of Michigan final consumer sentiment reading for February came in at 70.8, better than the figure of 69 that had been expected. Still, the index was well off the level of 78.4 seen in January.

Declining issues outnumbered advancers by roughly 7 to 1 on the New York Stock Exchange, where consolidated volume came to 4.23 billion shares compared with 3.76 billion shares traded Thursday.

The Russell 2000 index of smaller companies fell 19.54, or 2.77 percent, to 686.18.

Overseas, Japan's Nikkei stock average closed down 2.32 percent. Britain's FTSE 100 lost 1.36 percent, Germany's DAX index fell 1.67 percent, and France's CAC-40 gave up 1.53 percent.

The Dow Jones industrial average ended the week down 114.63, or 0.93 percent, at 12,266.39. The Standard & Poor's 500 index finished down 22.48, or 1.66 percent, at 1,330.63. The Nasdaq composite index ended the week down 31.87, or 1.38 percent, at 2,271.48.

The Russell 2000 index finished the week down 9.25, or 1.33 percent, at 686.18.

The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended Friday at 13,455.96, down 207.07 points, or 1.52 percent, for the week. A year ago, the index was at 14,271.61.

Friday February 29, 08:29 PM Budget tax cuts provide fillip to TV services
MUMBAI (Reuters) - The government's proposal to exempt digital set-top boxes from customs duty is expected to give a fillip to television services providers via conditional access system and direct to home.

The finance minister proposed to exempt from duty specified parts of set top boxes in his 2008/09 budget speech on Friday.

"We were long waiting for such a change," said Deepak Chandnani, chief executive officer of Wire and Wireless (India) Ltd.

"This path-breaking initiative will tremendously encourage the multi-system operators to go for voluntary digitalisation and will facilitate win-win proposition for all players in the industry," he added.

The exemption of customs duty on specified parts of set top boxes were a welcome measure for the Information Communication Technology industry, said Naresh Wadhwa, President & Country Manager, India and SAARC, Cisco.

Shares in Wire and Wireless closed up 0.95 percent at 47.75 rupees after reaching a high of 49.80 rupees in intra-day deals, while that of Dish TV India Ltd climbed off a high of 65 rupees before closing at 61 rupees.