Indian Economy: News and Discussion (Jan 1 2010)

Abhijeet · Post by **Abhijeet** » 03 Jan 2011 19:29

Couldn't find the Indian Retail thread, so posting here.

We went to a Big Bazaar yesterday. As always, it was a pleasure to see the huge variety of goods in a single place. This one seems to have become even more like a Walmart or Target since my last visit -- there is a clear navigation pathway all around the store, with shortcuts at several points. You pass departments for cosmetics, shoes, electronics, furniture, home items, stationery, and groceries on your circuit. Each type of product seems to have a wide selection of competing brands, and many (perhaps most) items are at discounts over MRP.

This is how shopping in a civilized country should be.

Unfortunately, 99% of the shopping we do here in India is not in stores like this. Mostly, we make do with small stores that have limited (if any) selection, non-functioning airconditioning, no ability to browse the merchandise, unfriendly return policies, and where it's a pain to even get any of the staff to pay attention to you.

Big Bazaar seems to be one of the few Indian big box retailers. This particular store is about 25 km from our place, and it really is a big deal to go there given the traffic and roads situation. Big Bazaar is almost always packed to capacity, yet I don't remember reading of their aggressive expansion plans. And the usual suspects like Reliance, Tata etc don't seem to be trying to quickly set up their own big box retail chains across the country.

I'm not sure why this is -- lack of capital, low margins, or lack of cheap enough space to make the model work. But we need 3 or 4 such chains competing with each other within a few kilometers of every urban Indian, at least.

Theo_Fidel · Post by **Theo_Fidel** » 03 Jan 2011 19:57

Abhijeet wrote:Unfortunately, 99% of the shopping we do here in India is not in stores like this. Mostly, we make do with small stores that have limited (if any) selection, non-functioning airconditioning, no ability to browse the merchandise, unfriendly return policies, and where it's a pain to even get any of the staff to pay attention to you.

Yes, other than the crowds Big Bazaar is a nice shopping experience. I really like the idea that you can actually hold the product in your hand rather than depend on 'muni's' (child labor anyone)product selection for the day. The reason these stores are going slow is the earlier goonda action that was taken against them by the potti kadai's. Also finding the correct location with large area is tough. There is only 4 in the whole of Chennai, where there really needs to be about a hundred at least.

Typically a population of about 10,000 needs 1 big bazaar type store. So there should be about 800-900 in Chennai alone. They would in turn employ about 200,000 people. This is how far we are from a modern retail economy.

Singha · Post by **Singha** » 03 Jan 2011 20:21

not roamed around much in chennai so cannot compare, but in blr
books - crossword, landmark, sapna - the auld gangaram inspite of its massive head start could not expand beyond one store in MG road, plus flipkart has good prices online
food - food world was the pioneer, but then it sold most of its locations to spencer, what part is left is dying swiftly. spencer, fabmall, more, smart , total and SPAR rule the roost.
clothes & clothes - westside, lifestyle, shoppers stop plus single brand outlets like nike, reebok, adidas, raymonds, rockport, bata, proline, allen solly, woodland, zodiac, van heusen etc etc
home products - home stop, home town, @home
office products & stationary - staples , gangaram, william penn , acutally local shops are also quite cheap for this and have wide variety (koramagala bda complex)
toys - sapphire
moms - motherhood, baby store, mahindra retail, lifestyle etc
electronics - ezone, croma, panasonic & sony brand shops, reliance digital, girias, ...
cells - the mobile store, sangeetha, flipkart
alcohol - spencer, spar, madhuloka liquor boutique,
junk food - macD, kfc, taco bell, ccday, barista, pizza hut, dominos, papa gino, chilis, ruby tuesday, costa coffee, bagels n bakes, the french loaf ....
misc walmart type goods - big bazaar

together these no doubt employe tens of 1000s of people here incl front end and back end stretching back to factories and farms.

imho biggest issue is not lack of good shops but finding the time and energy to reach there in bad traffic and finding a good parking. in ameerka except for x-mas new year time its a fairly easy ride most times to any form of shopping.

Singha · Post by **Singha** » 03 Jan 2011 20:31

imho blr and NCR are probably further along the retail 'curve' than the rest of metros maybe? mumbai has the money but not the land; chennai has the money but not the attitude; kolkata does not have too much money, has the attitude but has a set of red monkeys to deal with;

dilli has all three - money , attitude, land and so does blr (less money but enough and a very young demographic in their peak buying years - young professionals and lakhs of students from all over)

Bade · Post by **Bade** » 03 Jan 2011 20:31

I saw a huge hypermart in whitefield and lot of home-stores around ORR. Hometown (?) etc Is that the Home-depot equivalent. Did not explore a lot except at FORUM mall while there and it was a pleasant enough experience, especially for clothes since one can get SDRE sized tailored ones. Also the alterations are quick and cheap. So overall, lots of such retail outlets are there. Big Bazaar is where we got all our stuff even 3 years ago in Trivandrum, to set up a place for MIL. Only things missing in the shopping experience is good roads and comfortable transport unless you have a private car. From an Indian perspective I felt there were more choices in products and outlets than there is in the most expensive county I live in massa.

Singha · Post by **Singha** » 03 Jan 2011 20:38

taco bell is said to have chosen blr to enter india market due to a more 'globalized' palate here willing to try new tastes

Abhijeet · Post by **Abhijeet** » 03 Jan 2011 20:59

I agree that there are an increasing number of good quality shops coming up in India. Unfortunately, not too many around where we live (which is a local problem) but also, most of them are specialized stores that sell one type of product -- electronics in one, clothes in another etc. Look at the number of different store names in Singha's post. Big Bazaar is different in that you have this huge range of product categories under one roof, which is still very rare in India.

Theo_Fidel · Post by **Theo_Fidel** » 03 Jan 2011 21:12

Yes, Singha missed his coffee this morning..

We were talking about the Lowest product category. Not TFTA stuff.

Big Bazaar is definitely a lower middle class type store. You see the occasional chauffeur driven mammi, but mostly they are scooty's and Hero Honda types.

The thing that makes me mad is the Panda land stuff in Big Bazaar. Even the hair clips for my girls were made in Panda land. 3 for Rs 40 in nice Indian patterns too. Is it really cheaper to ship this stuff all the way Panda land than get some local guy stamp them out.

Abhijeet · Post by **Abhijeet** » 03 Jan 2011 23:49

Bade wrote:From an Indian perspective I felt there were more choices in products and outlets than there is in the most expensive county I live in massa.

This is so far from being true it's really not funny. While product availability in India has certainly improved, even in metro areas it's orders of magnitude behind what you can get even in rural areas of the US.

I remember walking into a convenience store in a place called (IIRC) Naalehu, which is in Hawaii and bills itself as the southernmost town in the US (they have a plaque to prove it!). The range of products there seemed almost identical to what you'd see in the Bay Area -- it was impossible to believe that we were over 2000 miles from the nearest continental landmass.

If you like stuff imported from Thailand or the Middle East and sold at dollar prices, India's absolutely the place to be. Not otherwise.

Bade · Post by **Bade** » 04 Jan 2011 00:09

^^^ Whenever I got out dining here in massa, the choices are limited, both at the high end which I rarely do being a true SDRE bania mallu, and also at the low end. I do not like chinese, japanese, or oiropean food outlets. So I am left with the usual crappy desi read pakjabi restaurants. OK that is food.

Now coming to clothes, less said the better. Size that fits is a serious problem unless you are a six foot tall one. Wimmen clothes less said the better. Most desi wimmen in western clothes look ugly to say the least.

Other than walmart (chinese goods) and its siblings what else in variety is there that is available. The drive to the marts are easy, but that is about it. Even the ice cream tastes funny here in malls and pizzas even more furrin to my taste buds.

The only thing I like about the west is its infrastructure and keep postponing my R2I due to that and the niche area that can employ me to my liking in India is limited.

Abhijeet · Post by **Abhijeet** » 04 Jan 2011 00:40

I think if you're unwilling to try out all the variety of experience -- culinary and other -- available in the US, then you are probably just homesick. Anyway, this is OT. No offence intended.

Ambar · Post by **Ambar** » 04 Jan 2011 07:39

Sorry, OT : Bade mian, do you reside in Fairfax or Alexandria?

Bade · Post by **Bade** » 04 Jan 2011 07:50

former

thanks again for postcount++ and sorry suraj...

Singha · Post by **Singha** » 04 Jan 2011 09:49

wsj excerpt:

NEW DELHI—India's largest-ever foreign-investment proposal caught a tailwind Monday, when a federal panel approved a plan by South Korea's Posco to build a $12 billion steel project in eastern India.

Although final environmental clearance rests with India's environment minister, whose decision is likely by the end of this month, the panel's approval makes it harder for the government to block the project in Orissa state.

The news came as a relief to the South Korean company, whose project hasn't budged for five years. Monday's decision by the federal environmental panel also lends encouragement to other foreign and domestic companies that have run up against the government's recent hard line on environmental clearances.

Posco's project, like several other proposed steel plants in India, also has faced strong opposition from local landowners who said the massive development would deprive them of their homes and livelihoods. Posco's plant still awaits approval from a committee considering whether the project violates tribal rights.

The government-appointed environmental panel said Monday that the initial approval given to the plant in 2007 appeared justified in light of new data.

The case is being closely watched not just because of its scale, but also because India's environment ministry of late has thwarted several high-profile projects, such as coal mines, on the grounds that proper environmental clearances hadn't been received.

Environment Minister Jairam Ramesh has become a focal point for industry criticism that his department leans too heavily toward environmental protection at the expense of fostering responsible development. Mr. Ramesh has said the Posco project would be among the most difficult decisions he has faced in office. He couldn't be reached for comment Monday.

The environmental panel agreed with a ruling by Orissa's provincial government that the compensation paid to displaced farmers and fishermen for the Posco project was fair. The panel also said drinking water for the local population won't be affected by the project. The panel said the 4,000 acres sought by Posco appeared compact, given that other steelmakers use more land for similar-sized projects.

The approval is limited, however, to the initial production capacity of the plant, which is around four million tons a year. Every stage of expansion for the project, which Posco hopes will produce 12 million tons a year, will require separate clearances, the panel reiterated.

It also said 5% of the total project cost should be used for socially relevant projects in the area and that one-quarter of the project area—1,000 acres—should be reserved as green space.

Within six months of the start of construction, Posco is to submit to authorities its plan to build a township for the workers.

Singha · Post by **Singha** » 04 Jan 2011 18:54

big bazaar products are unreliable at best and dangerous at worst. I gave up on going there 4 yrs ago once better choices like SPAR came online.

Prem · Post by **Prem** » 05 Jan 2011 00:22

http://www.myiris.com/newsCentre/storyS ... D=livenews
Indian macro economy outlook by Fairwealth

growth: Considering a strong GDP growth rate witnessed in the first two quarters of the current fiscal and a robust industry growth outlook in second half of FY11, we expect GDP growth for the current fiscal in between 8.5-8.75%.
Balance of payments (BoP) for Q2FY11: The continuous widening of the current account deficit and India`s dependence on capital flows to finance the current account deficit raises concern the overall BoP in the coming quarters. Moreover the FDI flows declined by 30% in the month of November 2010 and are likely to remain subdued due to weaker global recovery, further adding to threats of overall BoP sliding into the red zone.
Fiscal deficit: In the Union budget 2010-11, the government has estimated fiscal deficit at 5.5% of the GDP or Rs. 3814 billion. To achieve this, the government of India needs a higher revenue growth because it has incurred an additional expenditure of over Rs 750 billion through two supplementary grants wiping out the huge gains of 1000 billion made from the 3G Spectrum and resulting in a higher deficit in the 2nd quarter of the current fiscal.
Trade deficit: Continuous growth in exports lend conviction that the USD 200 billion set by the government for the current fiscal will be met. However, the appreciation of rupee against dollar might hamper the exports.
Core infrastructure industries: Core infrastructure that forms 26.7% of the IIP is considered to be advanced indicators of the industrial production. A slow growth in the core infrastructure in November 2010 has raised the concern about the industrial growth in the same month.
Capital flows: The FDI inflows in the country are expected to improve since he Foreign Direct Investment promotion board has approved 8 proposals of Foreign Direct Investment amounting to Rs 8.83 billion.The FIIs flows have been highly volatile in the last two months in the face of revealed
scams, poor corporate governance etc. Any further such news is likely to exhibit the
same trend in future. And in that case, capital account surplus which is largely financing current account deficit, will see a major fall.
Credit and deposit growth: Banks have recently raised deposit rates in the range of 25-175 basis points in order to lure investors and boost the deposit growth. They have also increased the lending rates to reduce the credit demand . We expect that this will reduce the gap between the credit and deposit growth.
Policy rates: Due to tight liquidity in the system and a declining trend witnessed in inflation, the RBI did not hike its key policy rates. However, the inflation is still above the tolerance level of RBI and may rise further on account of robust domestic demand and rising global commodity prices. If the inflation does not cool down to desired levels, the RBI may hike the policy rates in the third quarter monetary policy review to be held on Jan. 25, 2011.

Prem · Post by **Prem** » 05 Jan 2011 00:25

http://www.governancenow.com/news/regul ... ts-dancing
Economy 2010: Indian elephant starts dancingNine percent growth to be achieved, notwithstanding scams and corruptions

Recently, HDFC Chairman Deepak Parekh said that the leaked tapes has brought risks in neutralizing the country's growth. He also said the government should work as a team to get things back on track.
"The big boys in the government are pulling in different directions and not working as a team. They are following their own agenda, own departmental agenda, not looking at a broader picture, the PM has to get that organized," he said.Then there are differences between the strict environment norms that some say will pull down the economic growth rate. Ministry of Environment and Forests has defined 'no-go' areas for mining as those that have over 30 per cent gross forest cover or over 10 percent weighted forest cover and the mining is allowed only in the 'go' areas.Due to this, 206 coal blocks across 4,039 sq km in nine coalfields that have a production potential of 660 million tonnes (MT), were designated as 'no go' areas.During the year, the Government got over Rs 65,000 crore more than the budget estimates through auction of spectrum for high speed mobile and broadband services. It also got Parliament nod to spend close to this much amount over Budget estimates in two supplementary demands for grants.Also, helped by Coal India and others, the Government is on way to garner Rs 40,000 crore through disinvestment which will be used for financing its social sector needs.The Indian economy, after all, seems to be in robust shape, but challenges like corruption, high food inflation, headwinds from overseas, reforms taking backseat etc are knocking at the door and we can ignore them at our own peril.

yogi · Post by **yogi** » 05 Jan 2011 05:50

Pratyush wrote:Am not an economics hack. But it seems that the RBI has gone Paki and decided to shoot Indian oil imports in the head.

No love is lost. Its bijnis as usual.

India Refiners Said to Secure Iran Crude Oil on Credit

Suraj · Post by **Suraj** » 05 Jan 2011 22:00

Dec services PMI slips from Nov 4-month high

Growth in India's service sector eased in December from a four-month high the previous month, reflecting a slightly slower expansion in new business, a survey showed on Wednesday.

The HSBC Markit Business Activity Index, based on a survey of around 400 firms, fell to 57.7 in December from 60.1 in November -- its strongest reading since July 2010.

The December reading marked the 20th consecutive month that the key index of services in Asia's third-largest economy has been above the 50 mark that divides growth from contraction.

While the latest figure pointed to a sustained expansion in activity in the Indian service sector, it was weaker than the average for the year, the survey showed.

"The upturn in the service sector continued in December and companies remained optimistic about the outlook, although the respective index readings eased from the previous month," said Leif Eskesen, chief economist for India and ASEAN at HSBC.

"The expansion in activity was primarily driven by new business, which benefitted employment but also led to a small increase in outstanding business," Eskesen added.

Growth in new business remained strong although the sub-index fell marginally to 56.8 in December from the previous reading of 57.7.

The December data also signalled a moderate rise in employment in the Indian service sector, with job growth now recorded in each month since April 2009.

Both input and output prices rose, with the growth in input costs accelerating to its highest levels since July.

Auto sales bellweather:
Maruti reports 17% sales growth in Dec

The country’s largest car maker, Maruti Suzuki India (MSIL), today reported 17 per cent growth in its sales for December 2010 at 99,225 units. The company sold 84,804 units in the corresponding period the previous year.

MSI’s total passenger car sales rose by 20.75 per cent to 75,652 units in December as against 62,653 units in the same month in 2009, it added. In the nine months of this financial year, the company’s total sales stood at 9,27,665 units compared to 7,30,943 units, up by 26.91 per cent.

Meanwhile, Ashok Leyland said its cumulative vehicle sales in the first nine months of the financial year 2010-11 had gone up 69 per cent at 64,426 vehicles from 38,119 vehicles in the same period last financial year. The production has increased by 63.5 per cent at 66,952 vehicles as against 40,938 vehicles in the first nine months of the previous year. Exports marked 94 per cent growth at 7,803 units as against 4,023 units exported during the period April to December 2009. Domestic sales increased 66 per cent at 56,623 vehicles while the sales was 34,096 vehicles in the same period previous year.

Nissan Motor India (NMIPL) today said it had registered total sales of 1,104 units in December 2010, with its newly-launched compact car Micra clocking sales of 1,057 units. In the same month last year, the company sold a total of 12 units only, NMIPL said in a statement. The company had started nationwide sales of Micra on July 15 and sold 928 units in the starting month.

SwamyG · Post by **SwamyG** » 05 Jan 2011 22:28

Food prices and dietary changes are subjects that gets discussed here often.
India Food Prices Still Rising
There are a few answers to the question of why food prices increase....

The increase was mainly caused by a spike in vegetable prices, especially onions, after long rains in the western state of Maharashtra damaged crops, crimping supplies.

"This [high food inflation] is an area of concern, no doubt," Mr. Mukherjee told reporters. "It is not merely the base effect. There has been a real increase in the prices of certain food items," Mr. Mukherjee added.

The central bank said rising incomes have led to a shift in dietary patterns, with increasing demand for healthier, high-protein food such as meat, fish, milk and eggs.

Rising prices of international commodities, including crude oil, India's biggest import, have also dimmed hopes of any significant fall in inflation.

SwamyG · Post by **SwamyG** » 05 Jan 2011 22:37

The following article adds "speculative capital" into the simmering mixture. Food inflation challenges

While demand-supply mismatch (for whatever reason) does create price volatility, such volatility is exacerbated by rabid financialisation {can some guru explain what this means} of the food market.

Unchecked flow of speculative capital into the derivatives market for major food crops — already in the throes of weather concerns and robust demand growth - exerts a disproportionately larger impact on food prices. In the process, the poor are hurt the most.

All major drivers of food prices are intact. (1) Rising incomes and (2)expanding population in emerging markets, especially Asian countries, create voracious appetite for food. In addition, (3) rapid urbanisation and (4)changing food habits, (5) soaring crude prices as also bio-fuel policies of governments propel food prices higher. (6)Land constraints, (7)water shortage as also (8)global warming and climate change are newer challenges

In some sense, the real concern is not so much the global market dynamics as the utter lack of focus on, and attention to, domestic supply side problems.

New Delhi seems to be hoping against hope that the problem of food inflation will sort itself out or go away over time. Nothing can be more illusory.

Also, there seems to be combined inertia within the government that suggests an unholy belief that GDP numbers will overshadow inflation concerns.

We lack the ‘political will' to effect genuine transformation in the farm sector. India has all it takes to become a farm power.

There is no country in the world that is blessed with over 270 days of sunshine, 900 mm of annual rainfall, extraordinary biodiversity, varied agro-climatic conditions, hundreds of rivers crisscrossing the country, over 7,000 km of coastline and of course manpower.

We keep crowing about what we did nearly 40 years ago – the Green Revolution. But the world and our country for sure have come a long way since then. There are newer supply and demand side challenges waiting to be tackled.

svinayak · Post by **svinayak** » 05 Jan 2011 22:54

Ajatshatru wrote:"HSBC sees China and America leading global mega-boom"

http://uk.finance.yahoo.com/news/HSBC-s ... 77277.html

"In a sweeping report entitled "The World in 2050" , the bank said China would snatch the top slot as expected, but only narrowly. China at $24.6 trillion (constant 2000 dollars) and the US at $22.3 trillion will together tower over the global economy in bipolar condominium - or simply the G2 - with India at $8.2 trillion far behind in third slot, and parts of Europe (news) slithering into oblivion".

This is due to the jesus in beijing phenomena

rohitvats · Post by **rohitvats** » 05 Jan 2011 23:01

Abhijeet wrote: <SNIP> I'm not sure why this is -- lack of capital, low margins, or lack of cheap enough space to make the model work. But we need 3 or 4 such chains competing with each other within a few kilometers of every urban Indian, at least.

Cost of Real Estate and share of household expenditure in high street/unorganized retail.

Uttam · Post by **Uttam** » 06 Jan 2011 02:17

Iran agrees to accept crude oil payments in rupees:Reserve Bank of India yet to give its nod to the proposal

I am struggling to understand why RBI will have a problem with payment in INR. So I listed the possible advantages of this system:

1) Promotes Indian exports to Iran: As very few countries trade in INR (Russia used to long time ago), all that Iran can do with INR is import from India.
2) Increase acceptance of INR in the international currency market.
3) Possibly reduce volatility of Crude prices if the contacts are signed in INR.

Possible disadvantage:
1) Iran getting INR worth $12 billion a year can manipulate INR valuation.

Advantage for Iran:
1) In 2009 Iran had a trade surplus of $10 Billion. LINK. (It must have risen as crude price are sharply up in 2010.) It may be keeping most of those in USD, EUR, JPY. Trading in INR gives Iran a chance to diversify its foreign currency reserves.

So why is RBI so hesitant about payments to Iran in INR?

Virupaksha · Post by **Virupaksha** » 06 Jan 2011 02:25

You got to worry about the big dog, US.

Do you want to take on the big dog in a frontal fight?

Uttam · Post by **Uttam** » 06 Jan 2011 02:35

ravi_ku wrote:You got to worry about the big dog, US.

Do you want to take on the big dog in a frontal fight?

If you are trading with Iran, no matter what currency you use, you still have the US to worry about. Isn't it?

Virupaksha · Post by **Virupaksha** » 06 Jan 2011 02:39

oil trading in non-dollars is a big no-no for the dog. Its bite/wrath was shown through Saddam's tearup.

What will be the bone which you want pacify it with?

ramana · Post by **ramana** » 06 Jan 2011 02:52

If rupee trade resumes it a return to pre-1965 situation when the Indian rupee was the legal tender in the Persian Gulf. In 1965 KSA started pricing in $.

Virupaksha · Post by **Virupaksha** » 06 Jan 2011 03:20

ramana wrote:If rupee trade resumes it a return to pre-1965 situation when the Indian rupee was the legal tender in the Persian Gulf. In 1965 KSA started pricing in $.

Yes, Who else will accept from Indian rupees from Iran? or what are the services/goods which we can give to Iran in exchange for those rupees? We have a huge deficit with Iran. I would definitely not want to see Iran buying lands/fixed assets in India with those extra rupees like Saudi does with Pakistan.

Trading with countries like non-pak Saarc countries in Indian rupees will be a start.

Prem · Post by **Prem** » 06 Jan 2011 03:22

ramana wrote:If rupee trade resumes it a return to pre-1965 situation when the Indian rupee was the legal tender in the Persian Gulf. In 1965 KSA started pricing in $.

They are going through Dubai route . It will be win win for all the parties. INR to DXB and Dirham to Iran or they buy Indian maal right in DXB.

Arya Sumantra · Post by **Arya Sumantra** » 06 Jan 2011 03:23

But what's the harm in buying as much as we can with INR ? Even if mere 6 months supply is bought in INR that means that much of foreign exchange saved. If after that this trade stops for whatever reasons of instability in that region, we still would have saved some bit.

Virupaksha · Post by **Virupaksha** » 06 Jan 2011 03:40

Arya Sumantra wrote:But what's the harm in buying as much as we can with INR ? Even if mere 6 months supply is bought in INR that means that much of foreign exchange saved. If after that this trade stops for whatever reasons of instability in that region, we still would have saved some bit.

Is 6 months of cheaper supply of oil worth "XYZ" amount of trouble for India, say shutting out of Iraq oil or restrictions on outsourcing or black listing companies like ONGC, Reliance? What will our counter response be?

No, I dont know what that amount nor do I know the amount of trouble. But it has to be a carefully calibrated move, which means there will be some amount of debate/time before such a decision is made.

svinayak · Post by **svinayak** » 06 Jan 2011 03:41

Uttam wrote: Iran agrees to accept crude oil payments in rupees:Reserve Bank of India yet to give its nod to the proposal

I am struggling to understand why RBI will have a problem with payment in INR. So I listed the possible advantages of this system:

International bankers are the key
RBI needs to seek independence and autonomy for Indian economy and monetary policy
Unless it is held hostage to diktats of the international bankers

SwamyG · Post by **SwamyG** » 06 Jan 2011 03:42

Ravi: It is wise to befriend some countries in the ME. Why not start with the Perisans?

shyamd · Post by **shyamd** » 06 Jan 2011 04:35

I would not be surprised if UAE blocks it. Abu Dhabi has issued instructions to all emirati entities and US treasury dept is following it all up closely. Turkey or malaysia will be the next route.

Virupaksha · Post by **Virupaksha** » 06 Jan 2011 04:43

SwamyG wrote:Ravi: It is wise to befriend some countries in the ME. Why not start with the Perisans?

Definitely necessary to befriend, but dont make unnecessary enemies.

In our rush to befriend Iran, should we forget that we get our oil also from Saudi, UAE which are born enemies of Iran? Is there any need RIGHT NOW to pick sides?

putnanja · Post by **putnanja** » 06 Jan 2011 05:28

ravi_ku wrote:
SwamyG wrote:Ravi: It is wise to befriend some countries in the ME. Why not start with the Perisans?
Definitely necessary to befriend, but dont make unnecessary enemies.

In our rush to befriend Iran, should we forget that we get our oil also from Saudi, UAE which are born enemies of Iran? Is there any need RIGHT NOW to pick sides?

True, but in cutting off supplies from Iran, aren't you making unnecessary enemies with Iran? We would also don't want to be in a situation where SA or UAE has us by the balls. Remember that UAE and SA are the two biggest supporters of pakistan too. If we need to use chinese or indian currency, so be it.

SwamyG · Post by **SwamyG** » 06 Jan 2011 06:26

ravi_ku wrote:
SwamyG wrote:Ravi: It is wise to befriend some countries in the ME. Why not start with the Perisans?
Definitely necessary to befriend, but dont make unnecessary enemies.

In our rush to befriend Iran, should we forget that we get our oil also from Saudi, UAE which are born enemies of Iran? Is there any need RIGHT NOW to pick sides?

This is going to get OT, but when was Saudi even friendly towards India? And seriously Saudi India ka kya ukada laega? {WTF can Saudi do to India?} Before somebody admonishes, if you have any concerns from an economic perspective please point those out. Else your concerns have to be taken to other dhaagas.

Suraj · Post by **Suraj** » 06 Jan 2011 09:31

ravi_ku: Please keep discussions in this thread to the economic aspects, e.g. how well payment for oil in Rupees can work out. Issues like US interference, UAE/Saudi concerns etc are meant for the India-Iran thread, not here. Thanks.

PrasadZ · Post by **PrasadZ** » 06 Jan 2011 11:16

Arya Sumantra wrote:But what's the harm in buying as much as we can with INR ? Even if mere 6 months supply is bought in INR that means that much of foreign exchange saved. If after that this trade stops for whatever reasons of instability in that region, we still would have saved some bit.

Currencies are a tricky issue. INR floating in Iranian hands can be used by Iranian front companies to settle Iranian transactions from Indian shores. RBI has to guarantee end use of these monies due to UN sanctions and is, thus, vulnerable to international pressure (Can RBI guarantee that Iran will not buy nooks and settle the transaction through front companies located in India?). The only other usage of INR for Iran is to invest in Indian assets (but GOI has stringent limits on its debt being held by foreigners, so the realistic options are private sector debt or equity).