दृष्टिकोण – Indra's Viewpoint

As reported, the farmers in Maharashtra have demanded that they be paid Rs 18 per litre against the Rs 12 they get now. Pasteurised and packaged milk is sold at Rs 20 per litre in Kolhapur and other cities and at Rs 24 per litre in Mumbai. While pasteurising, packaging and transporting milk certainly cost, but the cooperatives are having a lot of margin making some few, say directors of the cooperatives running it, get the maximum advantages. However, it is farmers who must be the major beneficiaries. In places where the farmers are delivering milk to private collectors as in Bihar, the price paid to the farmers are further low. It is only Rs 9 a litre.

For all the produce, the farmer get similarly the minimal that the traders can manage with. I don’t know what ITC pays to the farmers for the wheat it procures from the farmers for its branded ‘atta’ that is sold almost at Rs 15-18 per kg. May be it is paying better than the petty rural traders, but ethically ITC must pay what it can retaining sufficient margin and not the maximum that it can manage taking advantages of their vulnerability.

Many a times, the mandi such as Azadpur in New Delhi publishes the bulk prices of vegetables and other grocery items in newspapers. I find for every thing it is one third of what I pay as consumer. Can something be done to cut down the cost in supply chain to the advantages to the producer farmers who are really poor? I wonder what the cotton farmers who resort to suicide mostly, are paid against what the exporters get from the clients.

With big business houses such Reliance and Bharati coming in retail business including groceries, the conditions of farmers can improve if they work on a model where they obtain the supplies directly from the farmers creating an efficient supply chain system and pay a fair price for their produce. The big retail outlets may facilitate farmers with some inputs to put in some value addition at the farmers end to enhance better earnings for the farmers thereby.

It must be a case for study by management institutes and government. The gap of price paid to the farmers and that paid by the consumer for the same for the same amount must reduce. Beside other assistance, this one help will certainly give an improved earning from he farmers.

Well-wishers of farmers! Can you do some effective empowering of the farmers in this regard so that the farmers can get the best price, instead of arranging doles to the farmers?

PS: I quote below from the latest issue of Business World:

Reliance Retail plans to build its own supply chain. “We will always buy from the farmer, almost never from the mandi,” says a group official. For example, the leafy vegetables, brinjals, tomatoes and green chillies in the Banjara Hills outlet were sourced directly from farmers in Vantimamdi, Chevella and nearby mandals in Ranga Reddy district of Andhra Pradesh. Already, a few hundred farmers have been hooked on to the Reliance Retail supply chain. In the next five years, that number will grow to millions. Even contract farming — by assisting farmers to procure high-quality seeds, fertilisers and other essential raw materials — is on the cards. By going to the farmer directly, Reliance Retail hopes to dis-intermediate the supply chain and eliminate waste. This means fresher products at lower cost.

Early morning, I could view the e-mail from Alapana, my daughter-in-law in US. She has gone for pre-Chhath fast. I got excited. “Will she carry out all rituals too?” I am sure US law and administration will not allow someone to pollute the water bodies as done in name of religion in India.

My wife informed, “She will be fasting only and someone else will carry out the rituals here in India.” Is it some sort of outsourcing of religious rituals too? Yamuna expressed her wish to go once to US and celebrate this Chhath there with all her daughters-in-law. I wonder if it will be possible. However, years ago I myself used to fast when in Hind Motor for Yamuna. Even today I understand the people of Bihari origin in Mauritius and other places also celebrate Chhath in big way. I will certainly like to go there once.

Fasting is real rigorous for Chhath. While Thursday was a day of ‘barawana’ (meaning limited type of eating), when the fastee can take only plain simple food with no onion or garlick even in curry or lintel even. Real fast starts on Friday that is ‘sanjhawat’ (evening of sweet food), when the fastee can eat only puri or roti with sweet milk pudding (kheer or sewayian) only in evening. The fastee is expected to drink as much water as possible with food only, as the fastee can’t take even water till Sunday morning when he completes the offerings to Sun God after seeing the Sun. It will be tomorrow (Saturday) evening, when the fastee will give his first offering (arghya of fruits, sweet breads, and milk) to the setting Sun in a water body, river, or even in sea. Fast continues till Sunday morning. After bath in water body, the fastee gives the second and last offerings to the setting Sun. The fast ends.

There is short too. For circumstantial reasons, one can certainly go through the rituals on the rooftop or in front of the house with a big bucket full of water. As I came to know, many in India also follow that route. Even in Noida one of Yamuna’s friend will have it on her rooftop. Holy River Yamuna’s water in New Delhi is so polluted that someone like me hardly can dare to get into it for ‘arghya’ to Sun God.

Since yesterday TV channels and newspapers are carrying reports. Chhath as it appears has Vedic origin. It is for Sun God. Bihar and to some extent eastern Uttar Pradesh celebrate it as major festivals. With increasing population from the region shifting to New Delhi and NCR, it has gained importance here too. Politically, these people in Delhi significantly influence the election results. As it appears, all political parties and its leaders are busy in facilitating this festival. Haryana has given water to fill Yamuna. All ghats have been made ready to handle the crowd that will be there on Saturday evening and Sunday morning.

I was amazed to read a report in today’s Times of India by one Maneesh Pandey that I didn’t know. It says, “In the badlands of Bihar, it is said that no crime is committed during three days of Chhath.” Last year I wished that the people of Bihar must vow to have Chhath, if Lalu’s misrule of 15 years ends after the assembly election. I wish this time a prosperity and development of Bihar as a whole under the new leadership. I pray for getting back the old glory of the state this time.

As estimated, China’s booming manufacturing sector has been sucking 1 percent of the farming population every year. For India, the figure is about half a percent. And the agriculture sector still bears the burden of about 70% of the population. Agriculture can’t bring prosperity to those below poverty line in rural India. It is only manufacturing that can do it. So, only National Manufacturing Competitiveness Council (NMCC) wishes between 12 and 14 percent growth per annum for manufacturing sector for the next 10 years, so that manufacturing’s share of GDP increases to 30-35% by 2020.

Why is the manufacturing sector in India lagging behind? If one goes by the CII and other spokesmen of the industries, for every thing the blame lies with the government and its policies, its reluctance to bring about the changes asked for by the industries. But is it really true? Have the industry and business houses done what it could have?

According to data in media, half of the world’s cameras, a third of air conditioners and televisions, and a quarter of washing machines are manufactured in China. 92 % of China’s exports comprise manufactured goods. Is it not a fact that India keeps on taking pride in being the topmost exporter of iron ores and cotton? Most of these exports are having China as destination. China becomes top exporter of finished textiles and apparel and produces more than 200 million tones of steel and exports the products made of the steel as major raw material. Why did Tata Steel, the pioneer in steel making in India didn’t go for becoming the largest steel maker in a full century of time period? Even with all liberalization in place for a decade now, Tata Steel didn’t add to its capacity in significant manner to become a world scale steel manufacturer, though it took all advantages given by the government to public sector SAIL. Till late in 90s, India didn’t produce good quality steel sheets for automobile body panels. With a good presence of Tatas in power sector and huge manpower in engineering, Tata could have reduced the cost of its power generation to the minimum and could have manufactured the plant and machinery too for expansion or addition, if it wished so. But it kept on announcing project such as one in Gopalpur of Orissa, but never executed that. The same happened with other industrialists and business houses except Ambani.

India perhaps considered camera as luxury item and thought it will remain perpetually dependent on import. None in industry went for any serious business tie-up as Chinese went. With India’s hot and uncomfortable summer, India could have gone for air conditioners and refrigerators in big way. However, Voltas of Tatas never thought of a world-class scale and quality for its air conditioners, nor did Godrej had that mission for its refrigerator. Both the companies though belonging to two big business houses still don’t have any vision or strategy to become globally competitive and expand accordingly. In television, though many manufacturers sprung up, but except for Videocon none could grow to a global scale and technology. Today, Samsung and LG have taken over the control of the market. And that is the reason that even the component industry for the sector has not grown the way it would have with local manufacturer. Videocon with its acquisitions abroad particularly the latest one of Daewoo Electronics might be considered a serious player in this sector, though it is still not clear how far it will have its manufacturing in India. Indian manufacturers never considered washing machines, dishwashers, and micro ovens for inclusion in its product line, as it thought these appliances as unacceptable on large scale by Indian consumers. There are no reasons why some Indian manufacturer wouldn’t have grown as Haeir.

With all the systemic inefficiencies that mean higher cost of doing business in India, some industries have been gradually growing competitive and stay ahead with multitudes of suppliers from all over the globe. By consensus, these are auto components, electricals and electronics, pharmaceuticals, textiles, and specialty chemicals.

Auto component sector have over 500 big component manufacturers. Interestingly, 472 of these have the ISO certification with some even Deming Prize winners. Auto components may touch $40 billion or more, and the sector can export over $20 billion by 2015. Bharat Forge, Sundram Fasteners, Sona Koyo, Amtek Auto, Visteon India, Delphi India, component divisions of Mahindras and Tata Motors are some of the main players.

Market of electronic products is projected to be over $70 billion. Exports are hardly about $2 billion today. But many companies from developed countries are coming to India as a second location for manufacture because of its skilled manpower.

Textiles are another sector where the sky can be the limit.

Many other sectors can join the list with a little more innovative entrepreneurships and very little government support with certain sector based policy change. Leather, gems and jewellery, engineering services, tractors, machine tools, and heavy engineering and electrical components manufacturing are some among the prospective ones. And the growth in all these sectors will mean a lot of employment too.
The first basic requirement will be at least three to five ambitious entrepreneurs in the sector. Examples are the Excel Propack and Suzlon. Why can’t other entrepreneurs benchmark them?

Many good things are happening making the future of India’s manufacturing sector bright. I shall like to mention based on my personal view. Under an agreement, Ashok Leyland and Bosch will contribute about Rs 4 crore each for the engineering design programme offered by the department of engineering design, formed recently by IIT-M. Alliance of this sort will make Indian manufacturing sustainable under global thrust on innovations.

The ‘Times of India’ on October 23, 2006 had shocking news for India. It is a warning bell for all bad things to come from a rogue neighbours. And unfortunately one can’t change one’s neighbours. You are to find a way to live with the rogue ones too. You will have to develop all strength, both physical as well intellectual, to demand respect. The news runs as follows:

The Chinese are planning to dam the Brahmaputra River, known as Yarlung Tsangpo in Tibet, at the Shuomatan point (also known as the big U turn) in China and diverting 200 billion cubic metres of water annually to feed the aging Yellow river through a series of tunnels. The project presents an enormous engineering challenge, but with technology available today, it is doable. China has been known to undertake, and complete, seemingly impossible engineering feats – the Lhasa railway and Three Gorges Dam instantly.

As reported, the plan has the blessings of Chinese president Hu Jintao, a hydro engineer by profession. The project plans to take the diverted water to the country’s northeast – Shaanxi, Hebei, Beijing and Tianjin. If the project goes through, it could strangle one of India and Bangladesh’s biggest sources of water.

The proposed project, called the ‘Greater Western Water Diversion Project’, is part of the gigantic South-North water project that has already been started by China. In August, the Chinese government sanctioned 300 billion yuan to divert water from the upper reaches of the Yangtze river in the Qinghai-Tibet plateau to the upper reaches of the Yellow river in north-western China. It will bring water from the Yalong, Dadu and Jinsha rivers, which are tributaries of the Yangtze, to the upper reaches of the Yellow river.

China today has all the economic and political clout to carry out the project once it decides to go ahead and if that is the way to save the Yellow river. India can only present its case, but it is to be seen if China agrees and drops the project for the sake of Bangladesh and India. And again even if China agrees, what is the guarantee that it would abide by its agreement.

Recently China had built a dam on the Sutlej River. The Chinese foreign ministry acknowledged the dam in Zhada in Tibetan Autonomous Region (TAR), and confirmed to have “considered fully the impact on lower reaches.” India and China even signed an agreement on sharing information on Sutlej, yet during the 2005 Pareechu lake crisis, India drew little comfort from the pact.

Surprisingly, India has not yet talked on the issue with China? Will India take it up with Hu during his impending visit to New Delhi or remain quiet to be known as a good neighbour till the project gets completed? Unfortunately, even after the report in the media, the government doesn’t think it necessary to come out with some clarification to take fear out of the mind of the people of India. As reported, the Indian security officials opine that the prospects of geological disturbances alone may be a big enough challenge to make the project impossible. Why can’t some authentic experts from the Geological Survey of India come out with their views?

Sometimes, I feel miserable when I find leftists of India talking and behaving as the spokesmen of China. I expect some media person to approach Yechuri for an answer to this threat. With his recent study tour of China for SEZs, Yechury might be able to throw some light in favour of the Chinese project. I can’t expect him to talk anything against his faith gurus and their country.

I am surprised why can’t there be a right of representation of such issues some world body.
PS: News
Beijing’s message via CPM: let border wait, push for trade first

And I do also realize why Tibet would have been independent of China. Perhaps, it would have been prudent for Pandit Nehru if he had not agreed that Tibet was part of Mainland China.

PS: Latest News

No plans to divert Brahmaputra: China

Beijing: China has denied media reports that it was planning to divert waters of Brahmaputra river to its Yellow river to feed the parched northern regions.
“China has no such plans to build a dam and divert water from Yarlung Zangbo (Brahmaputra) to the Yellow river,” Chinese foreign ministry spokesman, Liu Jianchao said here when asked to comment on the issue. Liu said he did not have further information on the issue.

On Monday, the external affairs ministry said in a statement.
“We have understandings with the Chinese side under which they provide hydrological information in respect of Brahmaputra and Sutlej rivers during the flood season for flood control and disaster mitigation in downstream areas. We are discussing with the Chinese side the expansion of this cooperation.” PTI

Can India rely Chinese? But, perhaps, there is nothing that India can do.

Some views of Jagdish Bhagwati on SEZs (Special Economic Zones) are here as told to Dinesh Narayanan & Anil G Nair of ‘Times of India’.

Columbia University’s Jagdish Bhagwati opposes India setting up special economic zones, “SEZs are a sort of scaffolding with which you climb into more openness. Hopefully, that demonstration (of openness in SEZs) will show that it is worth having these policies. But now that you have the building, why do you need the scaffolding? Already the policies have changed. So, I think it’s a backward step,”

Bhagwati is one of the world’s most ardent advocates of globalisation. He was shortlisted even this year for Nobel economics prize, but missed.

India needs only clear policies that will integrate the country into the world market. ”We don’t need to learn lessons from China anymore, because the main lesson was outward-orientation. We should concentrate on making the additional reforms for reducing trade barriers.”

China needed SEZs because it had an export-oriented strategy, which relied on its eastern seaboard with four provinces and 700 million workers as a platform to experiment with the policy while the rest of the country remained closed.

”Basically, what they did was to take an export-oriented strategy, which was married into investment as well, because investment was more or less geared to export promotion. We did not cash in on that, partly because we were too scared of foreign investment.”

”And the way it (the SEZs in India) is being managed, you know the politicians are getting their hands on it and ultimately you have to take land. There is nothing wrong with it as long as people pay for it. And if you get politicians to assign it, then you can be sure there is a rent, and clearly when you have something like that, you are offering a temptation to the politicians or bureaucrats or whoever. That is also when you build resentment, when peoples’ lands are taken. But we are a democratic system. ”Similar things are happening in China, which is experiencing land grab. There they have no recourse at all. They don’t have any NGOs to go to, they don’t have a free press, no independent judiciary, and no opposition parties. So, what do they do? At least here it’s being discussed. But as I said, we don’t need the damn thing.”

Somehow, I do not agree with Bhagawati’s damning of India’s SEZs policy. SEZs are coming up almost like the big PSUs such as HMT, BHEL, Steel Plants at Bhillai, Rourkela, Bokaro, and Durgapur, and before that, even private companies in almost new locations- Tata’s TISCO and TELCO at Jamshedpur, Birla’s Jute Mills at Birlapur or Hindustan Motors at Hind Motors. The whole lot of facilities developed and townships grew all around. Presently, no one sets up plants with all the infrastructure such as a township, hospital, and educational institution as the cost of the plant increases, making a new project unviable.

SEZs perhaps are the business solutions to make industrialization of the country viable where the real estate portion of the area will be generating revenues as those will be owned by different users. However, the two things are very important. Promoters of the SEZs must not grab the land without proper compensation to the owners of the land. The owner farmers must get integrated in the project so that they become stakeholders and their future is safe and protected. And secondly, the SEZs must have clear roadmap of the industrial activities so that the creation of employment potential is part of the major primary objectives. Unfortunately, the allocation of SEZs till date doesn’t give a confidence that the manufacturing sector will get a significant boost once those are in place.

I think in all the SEZs, the provision of the professional educational institutions from trade training institutes to specialized engineering and management colleges that provide the required talent for the industrial activities of the zones, must exist. For example, the SEZs of auto components must have trade schools and engineering college specializing in design and manufacturing, a tool room catering to the tooling requirements, and engineering service provider to cater the maintenance and process planning necessity for the units. Similarly, one SEZ for textile manufacturing must have all the infrastructure facilities including a fashion design institute, a research and development laboratory and a machinery-manufacturing unit that will be of use to all the units.

SEZs can be a success, if it is an honest means to get India ahead and not only to provide the easy route to make money.

News
Yechury asks Nath to study Chinese SEZ model

We have left behind those oil lamps that used to light up our Deepawali nights. I still cherish the most vivid memory of lighting competition between halls of residences at IIT, Kharagpur in late 50s. It used be with oil lamps. Now we use just few earthen lamps only for inside near the little home temple. My wife, Yamuna goes for 21 of them.

As desired by Yamuna after seeing the lighting arrangement being made at neighbour’s house, I also went to my electrical shop. The owner is young man. I have been buying all my routine requirements from him. He also arranges for regular maintenance of domestic electrical systems. I asked him to send his electrician with some 10 lighting strings for external decoration as well as one for the temple inside too. As usual, I queried about the source. “Uncle, everything in market this year is Chinese including ‘Ganesh and Lakshmi’ statues that we buy to worship on this day.”

There was nothing to be surprised. Chinese have invaded the Indian market in big way. Earlier it used to be through smuggling, now globalisation and free trade had opened the floodgate for these small little things too. However, I asked about the quality.

” It is fine, Sir. Moreover, you shall not find the Indian ones anywhere.”

“Will you guarantee about the quality?”

” Sir, That I can’t, but then none has complained.”

Gaurav, the owner sent his electrician a day before Dhanteras. He fixed up the lighting and went. The night after Dhanteras, it rained. In evening, I found some of the strings have gone dead. Next day, it was Deepawali. I tried to contact the electrician on his cell phone. He assured to come for a check in the morning. On the day of Deepawali, I contacted Gaurav too. First time he was busy in worship of Goddess Lakshmi. The second time, he did respond but just assured to send his electrician if he came. I knew he was telling a lie. By that time, Yamuna informed that even the one inside on temple has gone off. She was very angry and morose as she thought it to be inauspicious. I kept on trying for the electrician. He came. He tried. He failed to correct the trouble and left blaming the Chinese profusely for the poor quality. Yamuna as usual was very angry on me, as I was not cautious enough to ensure the quality of the purchase. It was in real bad taste. As found out later, Gaurav had many customers complaining on the Deepawali day. He closed his shop and left for home.

Who is at fault? The Indian SSIs can’t compete on price with the Chinese. It is easier for the unscrupulous Indian traders to get the Chinese stuffs in bulk, and get it packed here in individual plastic bags. They hardly bother about the quality. As I understand they never demand it. May be the trade itself is through illegally managed route. The same is the case with the fireworks from China that are available in plenty in market. The traders charge high prices, because they fix up the prices based on opportunity to sell at that price. I call it opportunity price. Who can control it? We can’t leave everything to the government.

India must find a way to assist the small manufacturers to produce all that are being brought in from China for our consumers. As our market itself is huge enough so it becomes quite a good commercially viable business objective to produce these things cheap in our country itself.

I lost my money on the purchase, but more importantly I felt miserable on this auspicious day with this incident because of the poor quality of the Chinese who wish to rule the world. I am sure I shall not be buying anything Chinese hereafter if I could afford.

/

Pre-Diwali Friday became fabulous, a great day for those Indians, who keep track of the Indian Industry moving global that also in big deal. Tata Steel with Corus in league will become the fifth largest steel makers of the world. Tata Steels, as such on its own, has unique strength, its lowest cost of steel production. Tata steel makes primary steel at its Jamshedpur plant at $ 160 a tonne, whereas Corus makes the same at $540 a tonne.

As Ratan Tata confirmed, the acquisition, at $8.1 billion, would get the maximum advantage, as the companies would compliment each other. If complimented properly, the acquisition will make the company strategically very well positioned in steel business. As I understand, Corus has steel for industries such as automobiles, electrical, and engineering’s special sector (aeroplanes). With supply of steel slabs from Jamshedpur, Corus can produce its present products at much cheaper cost. As per one thumb rule estimate, at the current selling price of primary steel in UK, Tata Steel, Jamshedpur will make a clean profit of $120 and Corus will save $130 for very tonne of steel used.

Tata Steel has another overseas steel project, and is close to signing of a MOU with the Iranian government to set up a 5 million tonne steel unit. The project will make Tata access to cheap iron ore and low cost power of Iran. All are great happenings for the company.

Steel sector in India is very much in media with appearance of Posco of South Korea on the scene through its Orissa project. Even Mittal-Acelor is also in fray to set up plant in India. Tata has MOUs for setting up Greenfield projects of steel production in Orissa as well as Jharkhand.

Historically, Tata Steel was the first Indian steel company in India and very soon it will be completing its century. As Tata Steel didn’t expand its capacity, and other private entrepreneurs didn’t enter the sector, it was left to PSU SAIL to meet the country’s steel requirements. SAIL gradually added many plants, but because of government control couldn’t reach the heights that it could have, if it would have been a private company. Tata Steel took advantages of all the concessions granted to PSUs, but failed to expand as other private companies in the world were doing it. Even today, Tata Steel remains at position 56 globally by capacity. I feel bad today because of this, and so must be many. India will not have the world’s largest steel plant in India that it had the potential. Tata with its own energy wing for power production and cheap access to India’s iron ores could have built the capacity in India. That is my agony as Indian. I don’t know if with financial pressure of the huge acquisition, even those MOUs signed by Tatas would materialize or not. Acquisitions are great, but having production facilities provide many other benefits to the nation and its people; and that must be important for business house such as Tatas too.

With changes in industrial policy in favour of globalisation, Tata Steel has found the logically easier route of acquisition to come in the first ten steel manufacturers of the world. Now it is fifth. With Mittal, first and Tata, now, as every one says, India Inc. has arrived.

How Business World Reacts:
Corus Agrees to $8B Tata Steel Offer
Indian Steel Maker Is Ready to Acquire Much Larger British Rival
Tata-Corus
World’s 5th Largest Steel Co
Steeling for the future
Crowning glory: Tata buys up big chunk of UK ‘jewels’
Announced steel projects on course
See what a great media response

What Next
What’s next for Tata Group: An interview with its chairman: Ratan Tata explains how the company is expanding abroad while cultivating an emerging mass market at home.BY Ranjit V. Pandit

Happy Diwali

All lights on in power corridors round the world
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