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INDIA

& GLOBALISATIONFINANCIAL TIMES SPECIAL REPORT | Friday January 29 2010

www.ft.com/india-globalisation-2010

InsideLights,camera, LBWJoe Leahy looksat international foraysby the cricket andfilm industriesPage 4

A good crisis brings greater inf luence

The global financial crisishad threatened to turnthe clock back on a glo-balising India. Instead,

t he h an ds o f t im e h avead vanced and the country simpact has increased.

Second only to China as afast-growing large economy,unlike that export-driven giant,India emer ged r elativ ely ,unscathed by the global eco-

nomic downturn, in the wordsof the Asian Development Bank.

If economists were surprisedwhen the country raced awayfrom what had been resignedlyc al le d th e H in du r at e o f growth of about 3 per cent toreach highs of 9 per cent in themid 2000s, they have been evenmore impressed in past monthsby Indias ability to withstandfalling exports and externalfinancial shocks.

The countrys economic poli-cymakers have received interna-tional praise for their responseto the crisis. In recent weeks,projections for a speedy recov-ery have grown more optimistic.

Manmohan Singh, the primeminister and the man responsi-ble for opening up the economyin the early 1990s, speaks of areturn to 9-10 per cent growth ina couple of years. His financeminister, Pranab Mukherjee,forecasts 7.7 per cent this year,a fiscal stimulus-fuelled rise

from 6.7 per cent last year.Underlying our system is an

inherent political and economicresilience that gives our countrya nd i ts i ns ti tu ti on s g re atstrength and buoyancy, Mr

Singh reflects. During the yeargone by, the world faced anunprecedented economic andfinancial crisis. But the Indianeconomy weather ed it q uitewell. We were affected, but notso much as many other coun-tries.

This was just as well. The77-year-old Mr Singh warns thatthe impatience of youth in acountry where 70 per cent of the1.2bn population is under 35 will incr easingly d eter mineIndias future. He has prudentlychosen education, health, infra-structure and agriculture as thetop priorities after winning asecond term in office last year.

He is simultaneously pushingforward the countrys interlink-ages, striking free trade dealswith Asean and South Korea,and negotiating another withthe EU.

The resilience of the economyrests on a huge domestic mar-ket, and, unlike many Asiancounterparts, a limited relianceon exports, which are less than20 per cent of gross domesticp ro du ct . W hi le d om es t icdemand was largely uninter-rupted by the financial crisis,export sectors, such as diamondcutting and polishing, pharma-ceuticals and textiles, sufferedprecipitous declines and areonly now recovering.

Foreign capital flows and val-uations on Sensex, the bench-

mar k ind ex on the Bomb ayStock Exchange, bounced backrather quicker as investors seekreturns from one of the bright-est poles of economic activity.

M e r ge r s a n d a c q u i si t i o n sactivity is also set to rise. Cash-rich companies are weighingp u r c ha s e s i n r e c e ss i o n h i tE u ro p e , t h e U S a n d o t h e remerging markets.

A f a s t - g r o wi n g e c o n o m y ,albeit with a strong internalmotor, will hasten globalisation.The industrial sector is expand-ing at a double-digit rate, serv-ices, 55 per cent of GDP, are notfar behind. Only agriculture,dented by a poor monsoon andrepresenting 20 per cent of GDP,lags.

But there are still plenty ofobstacles in the way of an openeconomy. A racing car with thehandbrake on, is how one visit-ing politician describes the dragof over-regulation, red tape,vested interests and decrepit

infrastructure.Lee Kuan Yew, Singapores

former prime minister, identi-fies failure to follow Chinas

The benefits of foreigncapital inflows,remittances and agreater share of tradeare shaping policy,says James Lamont

Inside this issueCar manufacturingThe country is building a nameas a centre for low-costdevelopment. Joe Leahyreports Page 2

Pharma researchAmy Kazmin finds thatcompanies have begun toparticipate more in thediscovery process Page 2

World stage Moralising hasbeen exchanged for aleadership role, writesJames Lamont Page 3

Profile: SuratDomestic demand has beenthe citys best friend, reportsKevin Sieff Page 3

The diaspora The primeminister is wooing expatriates,writes James Lamont Page 4

Continued on Page 2 Prime Minister Manmohan Singh at the White House: there has been international praise for Indias response to the financial storm Bloomberg

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2 FINANCIAL TIMES FRIDAY JANUARY 29 2010

India & Globalisation

A good crisis brings greater inf luence on the world stage

focus on infrastructure asone of the biggest handicapsto Indias global integration.

T he c on fi d en t m oo dacross Asia has led manyinternational business lead-ers to comment on the starkcontrast between the ambi-tions of large developingeconomies and the moreintr ospective, punishingmood in the west.

Robert Zoellick, president

of the World Bank, is one.We all look to India now asa rising global economicpower and in our intercon-nected world it has played ahelpful role over the toughmoments of the past year,not just during the discus-sions of the G20, but also in

h o w i t h a s s t e e re d [ i ts ]recovery, says the formerUS Trade Representative,who once locked horns withIndia in trade talks.

International partners arebeating a path to the door,lured by the promise of adrive towards manufactur-ing to add to the momen-t u m a c h i ev e d b y a g l o-balised services industry.

In the caricature of theglobal economy, says LordMandelson, the UKs secre-

tary for Business. Chinamakes it, America buys it,India pr ovides the aftersales customer service andBritain does the structuredfinance. That formulationis changing.

India stands at a criticalpoint in its tr ansfor ma-

tion, he says. A youngp o p u la t i o n i s e a g er f o rchange and the freedom torealise this global ambition.If Indias initial growth wasdriven by low-cost and low-value service provision, thenext wave will be tied torising value-added technolo-gy-driven manufacturingand services.

T hi s n ex t w av e h asalready arrived. The IT out-sourcing sector the likesof Tata Consultancy Serv-

ices (TCS), Wipro and Info-sys and automotive indus-try including Hero Honda,B h a r at F o r ge a n d T a t aMotors are innovating andadopting technologies tocreate a global footprint.

N Chandrasekaran, thechief executive of TCS, says

the downturn in the westh a s o p e ne d u p g r ea t e roppor tunities in IT out-sour cing and businessprocessing.

But he lays emphasis ondeveloping new capabilities,products and business mod-els to remain relevant to cli-ents and move into newcountries. When offshoringitself was first proposed, noone believed it was a busi-ness model, he recalls.

The confidence in the

growing economy has per-meated other ar eas too.Over the past year, Indiahas sought to play a greaterleadership role in multilat-eral forums debating trade,climate change and reform-ing the global financialarchitecture.

Next months nationalb ud ge t w i l l b e a t es t o f w he th er t he C on gr es sParty-led government canmake the most of the post-crisis period and a strongvictory in last year's polls,by embarking on structuralreform.

Business groups are lob-bying for liberalisation oft h e d e f e n c e , r e t a i l a n dfinancial services sectors,labour market reform andstate disinvestments to help

sustain growth projections.T h e R e s e rv e B a n k o f

India, the centr al bank ,meanwhile, is r enewingefforts to broaden financialinclusion, and reach out tothe unbanked masses.

I n t h e s ho rt er t er m,rebuilding foreign exchange

reserves, allowing the rupeeto appreciate to help coolinflation, while maintaininga par tially open capitalaccount are the priorities.

Some believe that thecountrys economic forti-tude is derived from its iso-l a t i on a n d a p r o te c t i veshield of regulation, forgedover decades of socialistpolicies and entr enchedlocal business interests.

B u t t h e b e n e fi t s o f ag r e a t er s h a r e o f w o r l d

t r a d e, r e mi t t a n ce f l o w sclose to $50bn a year andthe appeal of foreign capitalinflows are shaping policy.

India was less affectedby the crisis than the restof the world, not because itwas isolated but because itscapitalist fundamentals are

s t r o n g , a r g u e s S h a s h iTharoor, the minister ofstate for external affairsand former United Nationso f f ic i a l. I n di a w i l l n o treturn to the economics ofnationalism which equatedpolitical independence witheconomic self-sufficiency.

T he e mb ra ce o f t heoutside world, however, willbe anything but rushed. Onthis, Mr Singh has the lastword: It is probably truethat we are a slow-moving

elephant but it is equallytr ue that with each stepforward we leave behinda d ee p i mp ri nt . T he reis a price that we pay intrying to carry all sectionsof our people along . . . It isp e r ha p s a p r i c e w o r t hpaying.

Pool of skillsand low costsfosters growth

At Jubilant O r ganosyssnew $20m laboratory in aleafy suburb of Bangalore,Suriya Rao, a 29-year-oldwith a Masters degree inorganic chemistry, hoversover flasks and burners,trying to initiate a reactionto create a molecule withmedicinal properties.

In a room nearby, Delhi-born Rajiv Tyagi, a 33-year-old biologist, is cloning pro-teins to use in tests of new-ly-synthesised molecules.

The two young men areamong 400 scientists thatJubilant employs at its Ban-galore Drug Discovery Cen-tre. They, with another 800in Delhi, aim to tackle thelatest global economic chal-lenge to be outsourced toIndia: the quest for new andbetter drugs for cancer, dia-betes, pain and other globalhealth problems.

India is moving fr omlabour arbitrage to creatingintellectual property, saysHari Bhartia, co-chairmanand managing director ofJubilant. Its not just out-sourcing we are partici-p a t i n g i n c o l l a b o ra t i v eresearch.

With many of their block-buster drugs going off pat-ent in the next few yearsand a limited pipeline ofpromising new products,multinational pharmaceuti-cal companies are strug-

gling to get greater bang fortheir limited research anddevelopment bucks.

In this quest, global druggiants such as Eli Lilly,Pfizer, AstraZeneca, Merckand Endo Pharmaceuticalshave begun turning to ahandful of Indian groupsthat supply materials andprovide technical supportfor innovative research and increasingly, carry outcutting-edge work them-s e lv e s a t m u c h l o we rcosts than elsewhere.

Drug research is a low-probability game, so if I domore with my dollars, I geta greater chance of suc-cess, says Swapan Bhatta-charya, managing directorof Kolkata-based TCG LifeSciences, which was set upi n 2 00 1, a nd r ec en tl yannounced par tner shipswith Pfizer and Endo to col-labor ate on the develop-ment of drug molecules.

Indias phar maceuticalindustry cut its teeth in the1970s, fostered by local pat-ent laws that only protectedthe unique processes of syn-thesising a drug molecule,rather than the moleculesthemselves.

Drug companies workedto develop chemical pro-cesses to re-create drugsalready-proven by foreignphar maceutical giants,building up strong skills inchemistry research as wellas low-cost manufacturing.

By the 1990s, Indian com-panies were supplying off-patent generic drugs to glo-bal markets, including theUS, under their own brandn a m es , a n d a s c o n tr a c tmanufacturers for foreigncompanies.

Today, the country hassome 110 drug manufactur-

ing facilities approved byt he U S F ed er al D ru g Administration.

B u t o v e r t h e p a s t f ewyears, Indian companieshave begun to participate inthe discovery and develop-ment processes of pharma-ceutical multinationals, atrend buoyed by the 2005strengthening of Indias pat-ent laws part of its com-m i t me n t s t o t h e W o r l dTrade Organisation.

Macquar ie, the invest-ment bank, estimates theglobal market for contractpharmaceutical research isabout $38bn, of which about$ 1 1b n g o es t o w ar d s t h edrug discovery and develop-ment process, with the restfor clinical trials.

So far, Indian companiessuch as Jubilant, TCG, Syn-gene, the Tata groups Advi-nus, and Dr Reddys Auri-gene, have moved to takepieces of that pie, tapping a

pool of young low-cost tal-ent and experienced scien-tists who have spent yearsworking in western drugcompanies but are keen toreturn home.

In some par tner ships,Indian companies receivefees to carry out specifiedtechnical tasks to supportresearch abroad, such assynthesising and supplyingsmall quantities of promis-ing molecules using meth-ods developed by foreignpartners.

But they have also begunto take the lead in the inno-vation process, working todiscover molecules to tacklediseases specified by foreigndrug companies. In theserisk-share projects, theyreceive basic fees to coverr esear ch costs, with the

promise of milestone pay-ments for molecules thatcan move successfullythrough the developmentprocess towards clinical tri-als in humans.

For the next three to fiveyears, we will take on morei n t e gr a t e d p r o j ec t s a n dmore risk, says Mr Bhatta-charya. The next stage willbe intellectual pr oper tysharing.

Already, Jubilant, whichhas had a drug discoverydeal with Eli Lilly for thepast four years and has justextended it for another five,has delivered a fully home-grown molecule for useagainst cancer that willsoon begin clinical trials.Lilly owns the molecule. Ifthe drug proves successful,it will be a huge affirmationnot just of the company but of the potential capacityfor innovation in Indiasdrug industry as a whole.

Still, industr y leader ssays the dr ug-discover ybusiness is unlikely ever toreach the size of the coun-trys massive software andIT services industry, giventhe long lead time for bothd i s c o v e r in g d r u g s , a n ddeveloping scientific talent.

This is not scalable to 10t im es t he c ur re nt s iz einstantly, says Sri Mosur,Jubilants chief executiveand president of global drugdiscovery.

Its scaleable to threetimes or four times the size.Its not going to be like anIT company with 100,000employees. But the value

addition for any incremen-tal growth will be signifi-cant.

Cash-rich companies still eager to expand

Gautam Thapar, the chair-man of the Avantha group,an Indian industrial con-glomerate, is in acquisitivemood.

T h i s y e a r h i s f a m i ly -owned enterprise, whoseinterests range from paperand pulp to electrical engi-neering and which has reve-nues of $3.5bn a year, plansas many as five acquisitionsoverseas and at home. Two,at least, will be engineering.

The Delhi-based companyis illustrative of a deliberatestr ategy followed by ani nc re as in g n um be r o f Indian companies, large andmid-sized, to expand over-seas, particularly in US andEuropean markets.

W it h s tr on g b a la nc esheets fortified by a robust

domestic economy growing

at about 7 per cent this yearand confidence in their low-cost business models, theyview the coming months asa buying opportunity.

2010 looks very good. Wewere correctly structured

w h en w e w e n t i n t o t h eslowdown and that helpswith our finances. Wevekept our ammunition dry[for acquisitions], says MrThapar.

Over the past five years,two pillar s of Avanthasbusiness engineering andfood services have trans-formed themselves rapidlyi n t o m u l t in a t i on a l s . A swith Tata Motors acquisi-tion of Jaguar Land Rover,many of Avanthas pur -chases are driven by theneed to match the countryslow-cost production basewith advanced technology.

Four years ago CromptonGreaves, an electrical engi-neering company that ispart of the Avantha Group,acquired Pauwels, a trans-former manufacturer whoseoperations span Belgium,Ireland, the US, Canada andIndonesia. Since 2006, it has

bought Ganz, a Hungarian

company; Microsol, withoperations in Ireland, theUS and UK; Frances Sono-matra; and US-based MSEPower Systems.

T h e s a m e p a t te r n h a sb ee n f ol lo we d b y t he

groups food interests.Bangalore-based GlobalGreen acquired InterGardenin 2006 giving it assets inBelgium, Turkey and Hun-gary. The company suppliescustomers in 50 countrieswith onions, capers, pep-pers, cherries and sweet-corn. In pursuit of year -r ound cr op availability,Global Green is weighingacquisitions in Chile, Peruand Vietnam.

Over the past decade, ahandful of Indian compa-nies has developed a globalpresence. The IT outsourc-ing and business processingindustries, and the automo-tive and phar maceuticalsectors have captured thelimelight by inserting them-selves in business modelsand supply chains.

The Tata gr oup is theflagship of the trend, withits high-profile acquisitions

of Jaguar Land Rover and

of Corus, the Anglo-Dutchsteel maker.

Smaller companies arefollowing suit and those inadvisory services believethe Indian handful mayturn into a stampede.

An example is KPIT Cum-mins Infosystems, the coun-tr ys lar gest automotivetechnology company. It sup-plies 16 clients with soft-

ware and electronics. Itsnear 5,000 employees arespread across India, the US,the UK, Germany, Franceand China.

There is a distinct shiftin the overall car market,says Ravi Pandit, chairmanand chief executive. Com-panies will make their carshere and sell them all over

the world.

Not all expansions haveg on e e nt i re ly t o p l an .Ahead of the last years glo-bal financial crisis, someburnt their fingers.

S u z l on w a s a t e x ti l e sbusiness but became the

worlds third largest windturbine company. It boughtassets in Germany and Bel-gium, but its order bookand capital raising abilitywere badly hit by the finan-cial storm. It was struckagain when cr ack s wer efound in blades supplied tothe US market.

The crisis, however, hasnot deter r ed companiesfrom nursing global ambi-tions.

At the end of last year,Mukesh Ambani, chairmanof Reliance Industries madehis first attempt at a largeoverseas purchase with abid to buy LyondellBasell, astr uggling Nether lands-based chemicals producer.A deal would create one ofthe worlds largest chemi-cals companies, with com-b i n ed r e ve n u e o f a b o ut$80bn.

Likewise, Bharti Airtel,

Indias largest mobile tele-

phone oper ator , made athwarted bid last year totake a 49 per cent stake inMTN, a South African net-work with interests acrossA f ri c a , w i t h a v i ew t oundertaking a full merger

in a cash-and-shares dealworth about $23bn.R e g u l a t o ry o b s t a c l e s ,

however, stood in its wayand it has since had to set-tle for an acquisition closerto home, in Bangladesh.

Sanjeev Dhuna, a bankingpartner at law firm Allen &Overy in London, believesmore is to come. He identi-fies the following qualitiesa m o n g I n d i a n b u s i n e s sleaders: a long-term view,strength from a huge inter-nal market, cash reservesand access to capital.

Moreover , they have ac l ea r i d e a o f w h at t h eywant to buy overseas andare prepared to wait for it.

Globalisation for Indiancompanies is a badge of honour, he says. Someacquisitions dont look suc-cessful. But 10 years fromnow, the client will be look-ing back and saying that

was the right thing to do.

New multinationals

The financial crisishas not dented the acquisitive

mood, reportsJames Lamont

Largeambitionsfor smaller

vehicles

At the Delhi Auto Expo2010 in Indias capital inJanuary, the excitementof an emerging nation of

new consumers was palpable.The crowds mostly men and

boys of all ages jostled from thestand for Tata to those of JapansT oy ot a a n d S ou t h K or ea sHyundai, admiring the gleamingcreations of modern consumerismthat barely more than a decadeago would not have been seen inthis country.

During a press conference atthe show, the Society of IndianAutomobile Manufacturers, theindustry body, estimated totalattendance would reach 1.8m,which it said would make Delhithe worlds third biggest autoshow by number of attendees.

Weve had more than 10 globallaunches of new vehicles. Thatsdefinitely the first time thatshappened in Delhi, said SugartoSen, senior director of Siam.

The mass interest in the showcomes as Indias automotive sec-tor is emerging as one of the mostpromising industrial pillars of itsrapidly growing economy, along-side telecoms, information tech-nology and pharmaceuticals.

Not only is its car market grow-ing, it is increasing in sophistica-tion as the country builds a namefor itself as a centre for low-costinnovation, particularly in smallvehicles.

Volkswagen unveiled its best-selling Polo for launch into theIndian market while Toyota and

Honda revealed concept smallcars for domestic consumers.

If you really want to be a big

player in India, you have to be inthe small and mid-sized segment,Sandeep Singh, deputy managingdirector for marketing at ToyotaKirloskar Motor, says.

The automotive industry wasthird fastest-growing in the worldlast year after China and Ger-many, according to Siam, withpassenger car sales up 17.5 percent against a year earlier.

The industry's strong recoveryfrom the global economic slumpin 2008 has convinced Siam toretain its projection that it willgrow fourfold by 2016.

Under the target, automotivemanufacturing would contribute$145bn to gross domestic productby 2016, compared with $34bn in2007, says Pawan Goenka, presi-dent of Siam.

Analysts say that target looksambitious implying growth ofabout 16 per cent a year. But fewdoubt the industry will continueits strong expansion in line with,or better than the wider economy,which is expected to grow about 8per cent in the next fiscal yearending in March 2011.

Given the way China has gone,if India were even to follow half ofthat, yes it [Siams target] is pos-sible, says Mohit Arora, seniordir ector at r esear ch fir m JDPower.

The transformation of the auto-motive industry in the past 25years is hard to overstate. Prior toeconomic liberalisation, the roadswere the realm of the HindustanMotors Ambassador a version ofBritains Morris Oxford whichhas been in production for moret h a n 5 0 y e ar s w i th o ut m a jo rchange.

The Ambassador shared theroads with the Enfield, a Britishmotorcycle brand that has longs in ce d is ap pe ar ed f ro m t hemother country, as well as carsbased on old Fiat models.

The entry of Suzuki in a jointventure with the government inthe 1980s heralded the beginning

of industr y moder nisation.That process stepped up a level

two years ago when Tata Motors,Indias largest auto maker ,u n v ei l ed t h e T a t a N a no , t h eworlds cheapest car, establishingthe countrys credentials as a cen-tre of innovation.

The Nano sparked a race for thebottom of the market, with Nis-san-Renault teaming up withIndias Bajaj to make a car theysay will be cheaper to producethan the Nano, which sells for as t a r t in g p r i c e o f m o r e t h a n

Rs100,000 (1,340, 1,540, $2,178).These ultra-low cost cars are

aimed at the lower middle classes,

many of whom still transporttheir entire families around onone motorcycle, an unsafe anduncomfortable proposition on thehot and crowded roads.

Attention at the Delhi autoshow, however, centred not onthe ultra-low cost segment but oncompacts and hatchbacks, withToyota stealing the limelight withits concept car, the Etios.

The Japanese carmaker spentabout three years researching theEtios, designing a vehicle cheapenough (with an expected price ofabout Rs500,000) to appeal to thecost-conscious middle-class con-sumer but that still meets theJapanese producers standards.

The entry of Toyota into themass market hitherto it hadconcentrated on more expensivepremium sedans, larger vans andsports utility vehicles is a chal-lenge to the existing mar k etleader, Maruti Suzuki.

With Volkswagen also launch-ing the Polo and Honda nearingcompletion of its cheaper com-

pact, the stage is set for the battleof the small car in India.

Mr Arora says Volkswagen isfinancially strong but its name isnot as well known. Honda is seenas a technology leader in India,with its record of delivering styl-ish high-quality cars. Toyota is arelative latecomer to the coun-trys mass market but its recordelsewhere marks it out as a seri-ous threat to Suzuki.

While small cars stole the lime-light, a host of other vehicles viedf o r a t t e n t io n , f r o m t h e T a t agroups new modern trucks tomotorcycles and three wheelersaimed at farmers and taxi drivers.

Pushing through the teemingc ro wd s , h ow ev er , o n e w asreminded of what could becomethe most serious obstacle to thisrapidly expanding sector.

With roads and streets alreadycrammed with vehicles and pedes-trians and parking lots full, where

are people going to drive all ofthese new wonders of the automo-tive world?

Car manufacturing

The country is buildinga name as a centre for low-cost development,writes Joe Leahy

New sets of wheels: attention at the Delhi Auto Expo focused on compact and hatchback models Getty

If you really want tobe a big player inIndia, you have tobe in the small andmid-sized segment

Pharma research

Home-growncompanies aremore involved ininnovation, saysAmy Kazmin

2010 looks verygood. We werecorrectly structuredwhen we wentinto the slowdownand that helps

Contributors

James LamontSouth Asia Bureau Chief

Joe LeahyMumbai Bureau Chief

Amy KazminSouth Asia Correspondent

Kevin Sieff

FT Contributor

Ursula MiltonCommissioning Editor

Steven BirdDesigner

Andy MearsPicture Editor

For advertising details,contact:Angela MackayTel: +852 2905 5552Fax: +852 2537 1211Email:angela.mackay@ft.com

Continued from Page 1

Its not just

outsourcingHari Bhartiaof JubilantOrganosys

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FINANCIAL TIMES FRIDAY JANUARY 29 2010 3

India & Globalisation

An appetite to lead on climate and trade

In d i a s p l a c e i n t h eworld is a subject thatc an r ai se h a ck le s.Shashi Tharoor, minis-

ter of state for externalaffairs, knows that all toowell.

T he f or me r U ni te dNations official was pillo-ried this month for beinganti-Nehruvian becauseof the way he summarised alecture by visiting UK polit-ical scientist Lord BhikuParekh.

In his summary, Mr Tha-roor had said a foreign pol-icy that drew on his coun-

trys sense of civilisation,and the contr ibution of Mahatma Gandhi and Jawa-harlal Nehru, Indias firstp ri me m in is te r, h adenhanced Indias standing

in the world but also earnedus the negative reputationof r unning a mor alisticc o mm en ta ry o n w or ldaffairs. Western diplomatscall it sniping from thesidelines.

As the economy strength-ens, policymakers and aca-demics identify a new rolefor their country in a moreglobalised world.

A seat at the G20 group ofleading nations and the pur-suit of a bigger role at theUN has encouraged a moveaway from the moralisticcommentary of the olddays and the showing ofgreater leadership in globalissues.

Trade and climate change

are where the country hasmost clearly demonstratedan appetite to play a lead-ing role over the past year.

India was in some quar-ters blamed for being partly

responsible for the collapseof the World Trade Organi-sations Doha Round talkslast year. The breakdownwas over a disagreementbetween the US and Indiaabout what would happen ifIndia faced a massive influxof imports and was allowedto raise tariffs.

It has since tried to repairt he d am ag e. A na ndSharma, Kamal Naths suc-cessor in the trade ministry,won applause from the glo-bal community, includingPascal Lamy, the directorgeneral of the WTO, for try-ing to close what are stillwide gaps.

The significance of thesediscussions in India cannot

be underestimated, saysBaroness Catherine Ashton,European Union High Rep-r e s e nt a t i v e f o r F o r e ig nAffairs and Security Policyand former EU trade com-

missioner, of talks hosted inNew Dehi in September.For India to do this was

a risk. You see the discus-sions were not guaranteedto go well. Yet ministerSharma and the prime min-ister [Manmohan Singh]were willing to bring every-one together and say Indiais fully engaged and wantsto move forward.

The country did not earnwarm words from Europeanpartners when it doggedlyopposed legally binding car-bon emissions in the UN cli-m at e c ha ng e t al ks i nCopenhagen.

But in Jairam Ramesh,the strident environmentminister, they found some-

and be seen as part of glo-bal solutions.

One lesson India mustlearn from Copenhagen ist h a t w e m u st n e g ot i a tefrom a position of strength

and not defensively. [Wemust present] what we aregoing to do r ather thanwhat [we] cannot do".

He was energised by the75 minutes of negotiationbetween the Basic group Brazil, South Africa, Indiaand China and US Presi-dent Barack Obama thatproduced the Accord.

A lt ho ug h m an y s eeCopenhagen as a failure, hedescribes it as a water-s h ed e ve nt , i n w hi chChina emerged as a well-prepared counter-balance tothe US.

Encouraged by pragma-tism, he views possibilitiesfor the Basic grouping innegotiating trade pacts and

reforming the worlds finan-cial architecture.

Some commentators con-sider India could go one bet-ter and cement a strongerpartnership with the US,

with whom it shares liberaldemocratic traditions.Jagdish Bhagwati, profes-

sor of economics and law atColumbia University in theUS, has urged the countryto engage with the US morecreatively in both trade andclimate negotiations.

He has appealed to NewDelhi to be more sensitiveto the severe domestic con-str aints that Mr O bamafaces and warned againstt o o c l o s e a l l i a n c e w i t hChina. He suggests seekingcompensation for the dam-age of global warming byunderstanding better therights and penalties the USlegal system accords.

Obama is constrained,

b u t h e w i l l n o t b e c o n-strained forever. We shouldhave held his hand, givenhim some ideas, says ProfBhagwati of the climatechange talks.

He also points out Indiasneed to build its credibilityby addressing the plight ofits millions of poor peoplewith an inclusive economicgrowth strategy.

He is not alone in ques-tioning the durability ofcommon cause with China s o d o e s M r S i n g h. T h ep r i m e m i n i s t e r d e t e c t sChinas greater assertive-ness away from the negoti-ating table and on Indiasborder. Others in his gov-ernment voice fears aboutChina ar ming ar ch-rivalPakistan.

Their comments serve asa r e mi n d er t h a t I n d i a splace in the world is seldoma comfortable one.

Attention tolocal palatespays off

When McDonalds venturedinto India in 1996, it offereda n a l l - A me r i c a n d i n i n g experience minus one vitalingredient the beef.

I t s c o n s u m p ti o n i s aw i d e sp r e ad t a b o o , e v e namong the countrys meat-eaters, so the fast food giantsubstituted mutton in itsotherwise standard globalmenu.

W e t h o u gh t t h a t w ecould just replace one redm ea t w it h t he o th er ,r e c a l ls V i k r a m B a k s h i ,managing director of Con-naught Plaza Restaurants,which holds the franchiseto operate McDonalds innorth and east India.

But that underestimatedthe challenge of catering toIndian tastes. With fat con-tent far lower than that ofbeef, mutton burgers wererubbery, not juicy. McDon-alds special sauce did notquite suit the meat either.

And many Indians stillfeared eating mutton out-side the home, in case itwas inadvertently mixedwith beef.

After two years of slug-gish sales, the companywithdrew its mutton burg-ers after casting round formore popular offerings including more vegetarianitems.

Today, 70 per cent of itsIndia menu is indigen-ised, with items such aspaneer salsa wrap, andvarious chicken and vege-tarian burgers developedfor Indian palates.

The localisation is payingoff. McDonalds Indian reve-nues, which analysts put at$120m, are growing 33 percent a year, fuelled by newoutlets and also an 11 percent year-on-year increasesin same-store sales.

We made a lot of mis-takes until we got it right,says Mr Bakshi. But weare really at the cusp of tak-

ing off.McDonalds tr ajector y

reflects the wider story ofwestern fast food companyexperiences in India.

U S r e s t a u r a n t c h a i n ssuch as McDonalds, Dom-i no s P iz za , a nd Y umBrands KFC set up shop inthe late 1990s, expectinghuge demand.

Instead, Indians accus-t om ed t o s pi cy f oo ds er ve d f re sh a t h om e,street-side stalls and localr estaur ants tur ned uptheir noses at the insipidwestern fare.

B u t a f t e r a d e c ad e o f experimentation and adapt-ing food to local tastes, fastfood chains ar e gainingg ro un d, a s d is po sa b leincomes rise and lifestyleschange.

I would call it a revolu-tion, says Ajay Kaul, chiefexecutive of Jubilant Food-

Works, master franchisee ofDominos Pizza. The con-sumers evolved, the tastesevolved; the menus and for-mats followed.

Dominos is the fastestgrowing fast food brand. Ithas opened 110 stores in thepast two years, and with

another 65 to 70 new storesthis year, it will have some310 outlets in 55 cities bythe end of March.

Its local menu is domi-nated by recipes devised forIndian tastes including aPizza Keema Do Pyaaza,and a barbecue (tandoori)chicken pizza.

Nearly all the new storesalso have eat-in space, afirst for the chain globallyand a recognition that formany Indians especially

in smaller towns diningout is still a popular aspira-tion.

With revenues of about$60m last year, JubilantF oo d Wo rk s l a st w ee kbecame the fir st Indianquick-service chain to gopublic, as the India PrivateEquity Fund and IndoceanPizza Holding, an arm of JPMorgan, sell their combined32 per cent stak e in thec om pa n y, w hi c h t h eybought in 1999.

Jubilant has also issued4m new shares, which willbe used to retire debt.

Western chains are still asmall part of Indias esti-mated $6bn food servicesmarket, accounting for lessthan 5 per cent of totalsales, according to Techno-pak Advisors, a market con-sultancy.

McDonalds has just 174outlets in India, compared

with 1,200 in China, whileYum has just 75 KFC res-taurants in India, against2,700 in China.

But with the fast food sec-tor growing about 15 to 20per cent a year, they areexpanding fast.

Yum plans to expand to500 KFCs half company-owned and half franchisees in India by 2015. The com-pany will also open its firstTaco Bell this year, a nod tolocal consumers hunger forsomething different.

Subway Sandwiches, an e w er e n t ra n t , h a s 1 5 1stores in 35 cities, and aimsto reach 500 by 2015.

Yet as mar ket gr owthaccelerates, competition isintensifying. Global chainsincluding Papa Johns andAu Bon Pain have recentlytied up with Indian compa-nies to test the market, andother US chains are said tobe scouting for partners.

Popular Indian r estau-rants such as Nirulas andSagar Ratna, which special-ises in south Indian food,are also expanding, with 60to 70 locations each.

Raghav Gupta, Techno-pak pr esident, says fastfood will continue to grow,as consumers move fromdining out mainly on spe-cial occasions towar dsdoing so regularly for con-venience.

However , new for eign

entrants will not have aneasy go of it. For every-body who has come into thecountry, customisation forthe Indian palate has been anecessity, says Mr Gupta.

Consumers her e stillwant a McDonalds burgerwith an Indian taste.

The consumersevolved, thetastes evolved;the menus andformats followed

IT support that takes pride in its roots

Sara Benton, a homemakerand saleswoman in Peoria,Illinois, was distressed. Herpersonal computer loadedwith her childrens photosand sensitive bank details was infected by virulentviruses.

Each time she tried touse the internet, theviruses redirected her topornographic websites,unleashing pop-ups withshocking images.

I couldnt even turn mycomputer on for fear my

kids would be standingthere, Ms Benton says. Itwas horrible. I spent hoursand hours trying to fix it,but I couldnt get it tostop.

Finally, Mr Bentoncontacted a young Indiancompany, iYogi, that helps

PC users in the US andEurope deal with a fullrange of computerchallenges, includingviruses, security, installingsoftware, and connectingperipheral equipment suchas digital cameras, MP3players, and printers.

Over the next few hours,Syed Sharique Ali, a23-year-old iYoginetworking expert, andanother technician whohad remotely accessed thestricken computer inPeoria from iYogis sleekheadquarters in Gurgaon,India removed 14 virusesand installed newanti-virus software on MsBentons machine.

They were fabulous,she recalls. Ive workedwith other help desks inthe US and they dont evencare if they help you. But

they kept being pleasant,and they kept trying tohelp me. It kind of blewmy mind that they were inIndia. A couple of times, Iwanted to say to them, Icant believe you are so faraway.

The company, which

started commercialoperations in 2007 and nowhas 100,000 annualsubscribers, is a braveinnovator in outsourcing an unabashedly Indiancompany, offering personalservices directly to westernretail customers.

We firmly believe itsthe next generation ofoutsourcing from India,said Vishal Dhar, iYogisco-founder, and presidentof marketing. Its anapproach built on customerownership and retention.

Indias massiveoutsourcing industry earnsabout $60bn a year,running call centres forwestern businesses,supplying software and ITservices and handlingother back office processes.

Growth has been drivenprimarily by large western

companies cutting costs byshifting whole activitiesoffshore.

But corporate bossesnormally instruct Indiancall centre workers talkingto overseas customers tohide the fact that they arein India, by using

western names, accentmodification training, andacculturation classes.

Some IT powerhouses donot ask the same of theirhighly-skilled computerengineers, but this isbecause these companiesmostly supply IT and otherback-office support to bigcompanies, rather thaninteracting with retailconsumers.

In that sense, iYogi isblazing a trail. With itswitty slogan: Great TechSupport, Good karma, andphotos of its young,

hip-looking Indiantechnicians featuringprominently on its website,iYogi makes no effort tohide its roots.

And it has found thatdistressed US computerusers are willing to lookfar afield for the support

they badly need but cannotfind or afford at home.

It is not the only Indiancompany offering personalservices directly tocustomers in the west.Bangalore-basedTutorVista, founded in2005, uses about 1,200people to provide unlimitedprivate tutoring to about20,000 students in the USand elsewhere for $100 amonth. Pearson, thecompany that owns the FT,acquired a 17 per centstake in June.

Two other outfits,Bangalore-based GetFridayand US-based AskSunday,which has a large callcentre in Hyderabad, offerpersonal assistant andconcierge services toharried professionals.

But iYogi has tappedinto the huge pool of

frustrated computer usersand appears to be thebiggest and fastest-growingoutsourcing companyreaching out directly toconsumers in the west.

With 100,000 subscribersto its plan for unlimitedtechnical support for $140 a

year and many moresingle incident calls eachmonth, iYogi has morethan 1,200 English-speakingtechnicians.

It expects to double thatin the next six months tokeep pace with asubscriber base growing ablistering 35 per centquarter on quarter.

Uday Challu, chiefexecutive, says iYogi,which has raised $27m instart-up and growth capitalfrom SAP Ventures,Canaan Partners, SVBIndia Capital Partners, andDraper Fisher Jurvetson,will report turnover ofabout $20m for the year tothe end of March, and isprojecting revenues ofmore than $70m next year.

So far, iYogi has foundparticular success amongthose over 50, who account

for 75 per cent of itssubscriber base.

But with 320m PCs inuse in the US and retailtechnical support thereestimated to be worth$15bn-$23bn a year, iYogibelieves it has merelybegun to tap the potential.

ProfileiYogi

Amy Kazmin on ayoung companyfinding success withwestern consumers

Domesticdemand hasbeen the citysbest friend

Every morning, one thousandrough diamonds sent from Africaland on Keval Viranis desk. Hetakes a quick look at the stones,holding them by the handful to adesk lamp.

Most people see somethinglike this, and they think ofAntwerp or Tel Aviv, says MrVirani, director of Karp, one ofSurats largest diamond cuttingand polishing companies.Theyve never been to Surat.

About 80 per cent of theworlds diamonds are cut andpolished in the Gujarati city onthe countrys west coast.

With its smokestacks, slumsand 2m migrant labourers, it isan unlikely place for one of themost globalised parts of theIndian economy.

It has battled a series ofexceptional natural disasters: anoutbreak of pneumonic plague in1994 and one of the regionsworst floods in 2006.

About 250km north of Mumbai,it was the Dutch East IndiaCompanys first Indian port in1607, and has since swungbetweenexuberant growth and near-destitution.

Its most recent growth spurt,which started in the mid-1970s,put Surat on the map as a hubof Indias manufacturingindustry. It quickly became oneof the countrys largest pools ofunorganised, cheap labour and awelcome alternative forbusinesses tired of wrestlingwith Mumbais powerful unions.

Its slums were razed andrebuilt. Its 750,000 loomsoperated almost 24 hours a day,producing a third of thecountrys textiles. Diamondpolishing outfits thrived, fromKarps towering headquarters todank basements, where lessvaluable stones were cut.

By 2007-2008, diamond exportshad risen to $14bn, with most

operations carried out in Surat.The citys synthetic fabric sectorgrew to be worth $8.7bn, makingit the capital of India's growingtrade in synthetic textiles. Suratwas named the countrys fastestgrowing city in 2007, with anannual gross domestic productgrowth rate of 11.5 per cent.

Growth was rewarded by thegovernment: the construction ofa nearly completed cargo airport,and the Reserve Bank of India'sannouncement that it wouldallow advance payment for roughdiamonds without any bankguarantee from nine miningcompanies.

It's hard to believe just howmuch, and how quickly, this cityhas grown, says Sevanti Shah,chief executive of Venus Jewels,one of Surats best-knowndiamond polishing companies.

But last years financial crisisthreatened to stall the citysascent.

Unlike places such asBangalore, where serviceindustries have been the engineof growth, the highly cyclical and less recession-proof manufacturing industry is thebackbone of the economy.

At the end of 2008, thediamond industry was operatingat about a third of capacity. Itshed thousands of jobs. A stringof diamond traders committedsuicide, dominating the headlinesof local newspapers.

Outsiders thought we werefinished, says Rohit Mehta, thepresident of the Surat DiamondAssociation. They told us wewere too dependent on the west

as an export market. Industryleaders took a controversialdecision to stem the supply ofrough diamonds and avoidflooding the production pipeline.Thousands of domestic migrantsreturned to their rural homes.

But in the year since the worst

of the economic crisis, Surat hasbounced back in a recovery ledby national consumers. Thoughthe industry is still about 20 percent off its pre-recession peak,domestic consumption ofdiamonds nearly doubled lastyear, bringing in a total of $5bn,

according to a number ofindustry leaders.

Vasant Mehta, chairman ofIndias Gem & Jewellery ExportPromotion Council, predictsanother significant increase indomestic consumption in thecoming year.

For the first time, Indiandiamond polishers are hitchingtheir fate to home consumers.The trend is noticeable in Surat,where glitzy stores sell diamond

jewellery on bayside avenues.I dont know where we would

have been without domesticconsumption last year, says MrShah.

Some of Surats industryleaders have drastically shiftedfocus, targeting emergingmarkets.

Keval Virani of Karp says thathis compnay, a sightholder anauthorised bulk purchaser ofrough diamonds of De BeersDiamond Trading Company, hasshut down operations in the

US entirely, to focus greaterattention on China and India.

Were seeing wealthier Indianconsumers, and that helps buoysales. But its also a matter ofchanging tastes, Mr Virani says.This generation grew upwatching diamondadvertisements. Their parentswanted gold necklaces. Theywant diamonds.

Domestic demand has alsosustained the textile industry. Inspite of the economic downturn,many of Surats largest textilemanufacturers reported growthof about 7 per cent.

Like Mr Virani, Surats textilemanufacturers point to therecession as a lesson in theimportance of the countrysstrong domestic market.

Why bank on foreignconsumers, when we have somany people here who arehungry to buy? says MahendraKajiwalla, a local owner oftextile mills and retail outlets.

Profile

Surat

About 80 per cent ofworld diamond outputis cut and polishedin the western centre,writes Kevin Sieff

Sharp focus: a diamond cutter examines a gemstone in a workshop in Surat Getty

This generation grewup watching diamondadvertisements.Their parents wantedgold necklaces. Theywant diamonds

Fast food

Amy Kazmin reportschains are gainingground as disposableincome rises

World stage

James Lamontsays some experts

question closeralliance with China

Ive worked withhelpdesks in the USand they dont careif they help

one with whom they couldnegotiate.

After the Copenhagennegotiations, in which Indiaallied with China to con-

front the developed world,Mr Ramesh said the coun-try had to drop its tradi-tional nay-sayer approach

We must negotiatefrom a position ofstrength and notdefensively

Jairam Ramesh,

Environment Minister

8/14/2019 India & Globalisation

4/4

4 FINANCIAL TIMES FRIDAY JANUARY 29 2010

India & Globalisation

Market recovery bails out the super rich

Rising gradually, concrete blockby plate glass window above thewealthy apartment buildings ofsouth Mumbai is probably whatis the world s tallest familyhome.

T he c re at io n o f M uk es hAmbani, Indias wealthiest per-son, the house is equivalent to60 floors in height.

Named Antilla after themythical island, its constructionhas continued unabated throughthe financial crisis in spite of itsmammoth cost, which Indianmedia speculates could be morethan $1bn, although people closeto Mr Ambani dispute that.

Antilla may make Mr Ambanithe most visible of the countrysbillionaires, but he is by no

m ea ns t he o nl y o ne . T henumber of the nations wealthyis gr owing again, followingrecovery from the economicslowdown.

They v e far ed extr emely

well, says Anuj Chande, heado f t h e S o u th A si a g ro u p a tGr ant Thornton. The sheerdetermination and resilience ofIndian entrepreneurs standsthem in good stead in terms ofweathering the storm.

M r Chand e estimates thatthere are about 1,000 billionairesof Ind ian or igin ar ound theworld, half of them living inIndia itself.

Like China, India was sparedthe worst of the global crisis. Itsclosely regulated and relativelysmall banking system most ofwhich is in the hands of state-controlled companies and itslack of advanced derivativestrading, prevented meltdown inthe financial system.

Its economy is also dependenton consumption, with exportsplaying a much smaller rolethan in China, sparing it the

threat of soaring unemploymentafter demand for its products inwestern markets stalled.

Even so, the countrys superwealthy received a scare whenthe crisis set in after the col-

lapse of Lehman Brothers inSeptember 2008.Up until the beginning of that

year, the stock market had beena millionair e factor y . Ev er yentrepreneur with a businessplan was listing his companyand trying to earn a place onthe Forbes Rich List.

Mr Ambanis younger brother,Anil Ambani, was the last toride the equities boom, when hestaged Indias biggest initialpublic offering, the $3bn listingof his start-up electricity genera-tion group, Reliance Power, atthe beginning of the year.

That helped to elevate him tosixth on the Forbes list in 2008with a fortune estimated at$42bn, just one place below hisbrother.

Indeed, Forbes calculated in2008 that four Ind ians wereamong the 10 r ichest in the

world, with a combined fortuneof $160bn. Cumulatively, Indiasbillionaires were the wealthiestin Asia, exceeding even those inChina, with a worth of $335bn.

The onset of the crisis, how-

ever, led to an exodus of foreignmoney from the market, floor-ing many paper billionaires. Themarket cap italisation of thecountrys companies shrank 64

per cent in 2008, after rising 117per cent the previous year.

By March 2009, just two Indi-ans, Mukesh Ambani and Lak-shmi Mittal, the UK-based steeltycoon who made his fortune

o u t s i de I n d i a, r e m ai n e d i nForbes top 10.Anil Ambanis fortune at that

time shrank by $32bn the big-g e st a b so l ut e l o s s o f p a pe rwealth for any billionaire in theworld, while another Indian, KPSingh, the real estate baron whoruns the countrys largest prop-erty company, DLF, lost $25bn.

About 28 Indians lost their bil-lionaire status, including VijayMallya, the airline and liquorbaron known for his extrava-gant lifesty le. Another wasRamesh Chandra, whose prop-erty firm Unitech ran into cashtroubles.

M er ri ll L yn ch a nd C apGemini, in their Asia-PacificWorld Wealth Report, calculatedthat alongside Indias richestindividuals, those who havemore than $1m in liquid assetswere adversely affected during

2008. Their numbers fell nearlya third to 84,000.

The improvement in the mar-ket, ho wever, ha s ba i l ed o utmost of the formerly super rich.With stocks recouping most of

their losses during the financialcrisis, many tycoons have heldrights issues to recapitalise theirb u s i n e s s es a n d a r e q u i e t l ybecoming more aggressive again.

M r Chand r as Unitech, forinstance, has r aised moneythrough equity issues and thesale of a stake in his start-uptelecom joint venture to Nor-ways Telenor.

Mr Mallya, looking as unfazedas ever by global events, in Jan-uary bid hundreds of thousandsof dollars for players for hiscricket team, the Royal Chal-lengers Bangalore, which com-p etes in the Ind ian Pr emierL eague, the countr y s mostlucrative sporting tournament.

In another act of defiance, MrMallya, even before the crisiswas over, stepped into a NewYork auction to spend $1.8m onmemorabilia of Indian independ-

ence leader Mahatma Gandhithat he will give to the Indiangovernment.

Mr Chande says that Indiaswealthy chastened b y theimpact of the crisis on stocks

have re-emerged on Londonsproperty market. Diversifica-tion, particularly through inter-national real estate, has becomethe name of the game.

Thats one thing were seeingas a result of the downturn int h e U K a n d t h e c o nt i nu e dincrease in wealth in India. Itsthe fact that theyre lookingnow to diversify their wealthinternationally, he says.

With western economies stillstruggling to emerge from thedoldrums, Merrill Lynch andCap Gemini predict that India,alongside China, will remain themain source of new millionairesfor some time to come.

The combined wealth of Asia-Pacifics high net worth individ-uals is estimated to grow at anannual rate of 8.8 per cent until2018, faster than the global aver-age of 7.1 per cent, they say.

The wealthiest

Many are diversifyinginto international

property, reportsJoe Leahy

The determinationand resilience of Indianentrepreneurs standsthem in good stead

Anuj Chande,South Asia Group head,

Grant Thornton

Growing cultural clout mirrorscountrys rising economic status

There are times when LalitModi, the head of the IndianPr emier L eague, Ind ia' smost lucrative cricket tour-nament, has the excitedl o ok o f a m an w h o h a sstruck gold.

With the 45-day contestp r e pa r i n g f o r i t s t h i r dannual season this March,Mr Modi announced thismonth a ground-breakingdeal with Google to broad-cast the entire event live onYouTube a first for Indiansport and for the US tech-nology company.

This is the most excitingthing that Ive ever done,s a ys M r M o d i , a c a b leindustry veteran.

At the end of the day, asa content owner, our job isto get the content to thewidest possible audienceand with one stroke we areable to get it to the largestplatform without a doubt.YouTube and Google theyhave distribution clout allacross the world.

As yet, reality falls shortof the hype. YouTubes IPLbroadcast plan is still some-what experimental, withneither party revealing thevalue of the deal, how the

business will work, or howt h e y w i l l o v er c o me t h et e c h n i ca l c h a l l en g e s o f streaming 60 games live tomillions of users.

But few could deny thes i g n i f ic a n c e o f t h e a n -nouncement, which markeda n o t he r m o me n t i n t h eg r ow t h o f I n d ia n s o ftp o w er t h e c o u n t r y sglobal cultural influencethrough its cricket and Bol-lywood movie and musicentertainment industries.

This gr owing cultur alclout is linked to the coun-

trys rising status as one ofthe worlds largest and fast-est growing economies.

And the startling successof the IPL is a good illustra-tion of this. Formed littlemore than two years ago, itwas able to sell TV broad-c a s t in g r i gh t s t o S o n yEntertainment Televisionfor $1bn over 10 years.

The eight team franchisesof the tournament, which isb ased on the mad e forp rime-time shor tenedTwenty20 format of cricket,were sold for up to $112m.

The tournament, Indiasonly large annual sportingextravaganza, was immedi-ately seized on by industri-alists, Bollywood stars andmultinationals as the per-fect vehicle to target thenations emer ging massconsumer market.

Team owners range fromB o l l y wo o d s t a r s S h i l p aS h et t y a n d S h a h R u k hKhan to liquor and airline

baron, Vijay Mallya. Spon-sors include Vodafone andCitigroup.

Mr Modi is poised to auc-tion two more teams aheado f t h e t h i rd s e a s o n i nMarch, setting a reserveprice of $225m double themaximum amount fetchedfor a franchise in the previ-ous auction.

What makes the tourna-ment different is its interna-tional appeal, with everyteam featuring several for-e i g n c r i c k et s t a r s . T h eYouTube deal will enable

I nd ia s v as t o ve rs ea sd ia s po ra t o t un e i nt ogames, as well as fans inother cricketing nations inthe West Indies, the UK,Australia and New Zealand,South Africa and others.

Bollywood, meanwhile, ismaking an internationalmark, boosted by the suc-cess of the film SlumdogMillionaire.

Although a British film, itshowcased Indian settingsand actors, as well as Bolly-wood music.

Pro ducers po i nt to thehype surrounding this sea-

so ns Bo ll ywo o d bl ock-buster, 3 Idiots, a film aboutuni versi ty students tha ts t a r s m a l e l e a d , A a m i rKhan. The films distributor,Reliance Big Pictures, says 3Idiots had amassed $75m atbox offices worldwide by theend o f i ts thi rd week arecord for Bollywood.

S a n j e ev L a m b a, c h i e f executive of Reliance BigPictures, says that, as thenational mov ie b usinessreorganises from being ac o t t ag e i n d us t r y i n t o amore modern structure of

lar ge studios and mediaconglomerates, its interna-tional reach will increase.

Bolly wood and otherI n d i an r e g io n a l c i n e maap p eals to aud iences inmany countries outside thewest, where it is already acompetitor with Hollywood.

I nd i an f i l ms h a v e a smuch of a chance there asanyone else, as long as wemake films that have someuniversal truths and com-p elling char acter s, M rLamba says.

Most insiders, however,a re m or e c au ti ou s o nw h e t he r B o l l yw o o d c a nmake serious inroads intowestern markets.

Mr Lamba points out thatB o l l yw o o d f i l m s a r e i nHindi. Few foreign films those not made in Englishor in an English-speakingc ou nt ry h av e t ru lycrossed over.

Most make it into the arthouses but have not beaten

Hollywood at cineplexes inthe US.

S ti ll , a s B ol ly wo odevolves, its assault on Hol-ly woods hegemony willintensify. Reliance plans anEnglish version of its forth-coming film Kites, about aconman in Las Vegas.

We are going to releasethe English version as anEnglish language film, MrLamba says.

S i m il a r l i m it a t i on s t osome extent apply to MrModis cricket franchise.While the IPL talks con-

stantly of becoming glo-bal, the more correct termmight be international.

It is hard to see it appeal-ing to many people fromnon-cricket-playing nations.

Entertainment

Joe Leahyoninternational foraysby the cricket and film industries

Swept along: every Indian Premier League cricket team features foreign stars Getty

Country reaches outfor talent and money

Deepak L alwani is glowing withdelight. He has come to a foggy andwintry New Delhi to be recognised forhis services to his adopted country,

the UK, and to the country of hisbirth, India.

Originally from Mumbai, Mr Lal-wani has been a London-based stock-broker for about 20 years and is mar-ried to an Englishwoman. His careerin marshalling Indian investmentsand a recent appointment to the boardof the UK-India Business Council hascaught the eye of the Delhi-basedNon-Resident Indian Institute.

On the sidelines of an annual con-ference for people of Indian originhosted by the Indian government, hewas given the India InternationalAchievers Award, or Bharat SammanPravasi Prize.

India didnt always recognise itsdiaspora, says Mr Lalwani. Thereused to be a joke that NRI stood for N o t r e q u i re d I n d ia n . T h a t h a schanged.

His award is part of a wider effortby the Indian government to harnessthe financial resources and influenceof the countrys diaspora. The annualg e t -t o g e th e r , c a l l ed t h e P r a va s iBharatiya Diwas and hosted by the

Ministry of Overseas Indians, is nowin its eighth year and tries to fosterloyalty to the home country by cham-pioning Mahatma Gandhis exampleof the contribution an outsider canmake. It also invites people of Indianorigin to contribute to an economythat over the past decade has touchedyearly GDP growth of 9 per cent.

While some of the participants comewith gripes about tax and visa restric-tions, the government has biggerideas. This year, Manmohan Singh,the prime minister, made some of thestrongest overtures yet to this globalcommunity. He said he was consider-ing extending the vote in the worldslargest democracy to non-residentIndians and was taking steps to assistthose who lost their jobs abroad witha social safety net, including a Return

and Resettlement Fund.Mr Singh has already set up a prime

ministers advisory council of over-seas Indians and has struck agree-ments with foreign governments forthe protection of Indian workers, buthe also wants human capital andinvestment.

Mindful of some of the successfulforeign-educated young politicians inhis own Congress party, Mr Singhalso invited high-achieving expatri-ates to return to help India achievebetter governance.

We seek the active involvement ofthe overseas Indian communities inaccelerating the pace of our economicand social development . . . It is impor-tant that we make efforts to connectthe second generation of overseasIndians with their ancestral heritage,he said.

Mr Singh observes that Indiansabroad are good savers but not goodinvestors in India, where they mainlyput money into real estate. Some ofhis cabinet colleagues want to tip thebalance. In the past, the government

tapped the diaspora for funding itswar effort against Pakistan. NowKamal Nath, the roads and highwaysminister, has challenged the financeministry to launch infrastructurebonds to let emigrs participate in oneof the top priorities for the countryssustained growth.

India is one of the world's biggest

recipients of remittances, alongside

M exico and China. They totalled$50bn in the 2007-08 financial year; theglobal financial crisis has cut them toan estimated $40bn this year.

While Indias largest flows of moneycome from North America, they hadb een sp ur red in r ecent y ears b ydemand for migrant labour in thestrengthening economies of oil-export-ing Middle Eastern countries. An esti-mated 4m Indians work in the Gulf,yielding more than $20bn in remit-tances.

Evidence of the prosperity boughtby remittances is visible in somestates. Kerala in the south is particu-larly dependant on remittances fromthe Middle East, which represents asmuch as a quarter of its economy,according to research by HSBC, thebanking group.

The outflow of labour has beenaccompanied by an outflow of stu-dents to the UK, the US, Singaporeand Australia. These English-speakingcountr ies, aware of the needs ofIndias millions of young people, haveactively marketed themselves as edu-

cation centres offering attractivestudy packages.

In Australia, this strategy has comeunstuck, at least temporarily. A spateof violent attacks on Indians has leftwhat should be a promising bilateralrelationship strained. Enrolmentshave fallen, as Indians begin to movewhere they feel more welcome.

The diaspora

The prime minister is wooing expatriates,writes James Lamont

Indian films haveas much chanceas others, aslong as they haveuniversal truths andgripping characters

Students in the US and futureremittance senders?