Cablegate: New Delhi Weekly Econ Office Highlights for the Week Of

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E.O. 12958: N/A
TAGS: ECON EFIN EINV ECIN KIPR EIND ELTN ETRD TSPA IN JA
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF
JANUARY 04 TO JANUARY 08, 2010

1. (U) Below is a compilation of economic highlights from Embassy
New Delhi for the week of, January 04 TO January 08, 2010, including
the following:

-- Cabinet Clears Copyright Amendments for Introduction in
Parliament
-- GOI Under Fire at Economic Seminar
-- India Ranks Eighth in Internet Piracy
-- India Signs Agreement with Japan to Develop Industrial Corridor
-- GOI Raises Export Duties on Iron Ore
-- 3G Auctions to Miss Their Scheduled January 14, 2010 Start Date,
Yet Again

Cabinet Clears Copyright Amendments
for Introduction in Parliament
------------------------------------

2. (U) On December 24 the Indian Cabinet approved a bill to amend
the Copyright Act of 1957. The bill includes a host of changes
including conformity with the World Intellectual Property
Organization (WIPO) Internet Treaties, which include the WIPO
Copyright Treaty (WCT) and the WIPO Performances and Phonograms
Treaty (WPPT), goals long advocated by the USG. Information and
Broadcasting Minister Ms. Ambika Soni reportedly commented "while
India has not yet signed these treaties it is necessary to amend
domestic legislation to extend the copyright protection in the
digital environment." The GOI press release on the Cabinet decision
can be viewed at http://www.pib.nic.in.
3. (U) Besides introducing provisions to implement WIPO Internet
treaties, the Bill proposes other amendments including making
Producer and Principal Director as co-authors of the cinematograph
film, extending the copyright of the cinematorgraph film from 60 to
70 years, providing a fair deal exception for the production of
copyrighted material in special formats that can be used by
physically challenged people, extending the term of copyright
protection for photographs from 60 years to life of the author plus
sixty years and providing independent rights to authors of literary
and musical works in a cinematograph film. The Bill also proposes to
include certain provisions with regard to enforcement of copyright.
The Copyright Amendment Bill of 2009 will be introduced in the next
session of Parliament starting at the end of February 2010.
GOI Under Fire at Economic Seminar
----------------------------------

4. (U) At a January 4 economic seminar hosted by the Federation of
Indian Chambers of Commerce and Industry (FICCI), leading economists
and GOI officials expressed critical views on the role played by the
central government after the global economic crisis. Environment
Minister Jairam Ramesh said India needed fresh thinking on the role
of state investment. Rather than public-private partnerships, which
refer to private funding for public projects, Ramesh said there
needs to be both public investment and private management on a much
larger scale. He pointed to the Kerala school model as a successful
example of public funds being used for education administered by
private institutions.

5. (SBU) Rajiv Kumar, CEO of the Indian Council for Research on
International Economic Relations (ICRIER), said India faces
uncertainty from excessive government interference as well as from
globalization. According to Kumar, the common perception that
Indian industry could continue to grow despite the GOI is a myth.
Regarding globalization, Kumar did not think that India could handle
the foreign capital inflows it is receiving and should consider a
Tobin Tax and additional capital controls. (Note: In a December
meeting, Anand Bajaj, Ministry of Finance Director of Capital
Markets, told Econoff that India can handle the foreign capital it
is receiving and the GOI does not think there is any need for a
Tobin Tax or other capital control measures. End note.)

6. (U) Surjit Bhalla, Chairman of Oxus Investments, said India must
correct the excesses of the State. Although he said there was a
need for a central government, he rhetorically asked "who will
regulate the regulator?" He noted the central government is "well
ahead of itself" and there needs to be mechanisms to "discipline"
the central government.

NEW DELHI 00000031 002 OF 003

India Ranks Eighth in Internet Piracy
-------------------------------------

7. (U) According to a recent joint study by the Motion Picture
Association (MPA) and Software Company Dtechnet, India ranks eighth
in the world for the largest number of illegal Internet downloads.
Internet piracy is widespread in peer-to-peer (P2P) data sharing
with the highest level of film piracy. According to the MPA study
entitled 'Internet Piracy Landscape Audit,' the two main internet
piracy methods used in India are web-based file hosts 'CyberLockers'
and the file-sharing network 'BitTorrent.'

8. (U) The study reportedly lists India as the world's fourth
largest downloader after the US, the UK, and Canada, accounting for
about 6.5 percent of total downloads. Media reports have quoted MPA
President Michael Ellis as saying that this is alarming in view of
the fact that India has a very low base of Internet penetration
compared to the US and the UK. The study further suggests that
India's metro cities (Delhi, Mumbai and Bangalore) are the hub of
downloading activities where popular Bollywood movies get the
maximum number of downloads. According to domestic film industry
observers, the rate of internet piracy for films can go up even
higher with broadband penetration rising within the country. MPA is
reportedly in touch with some Internet Service Providers in order to
curb the illegal downloading by locating the downloader.

India Signs Agreement with Japan
to Develop Industrial Corridor
--------------------------------

9. (U) The Delhi-Mumbai Industrial Corridor (DMIC) is an ambitious
Government of India project to bring in global investment and
promote the region as a manufacturing destination. The six initial
sites identified for development in the corridor include
Dadri-Noida-Ghaziabad in Uttar Pradesh, Manesar-Bawal in Haryana,
Khushkhera-Bhiwadi-Neemrana in Rajasthan, Pitampura-Dhar-Mhow in
Madhya Pradesh and Bharuch-Dahej in Gujarat. On December 28, the
DMIC Development Corporation signed an agreement with the Japan
External Trade Organization for collaborating on the project and for
the transfer of Japanese expertise in developing and promoting
'smart communities' (eco-cities) around the DMIC project area. The
DMIC Project Development Fund will be funded by equal contributions
from India and Japan. A USD 75 million loan from the Japan Bank for
International Cooperation (JBIC) has established the fund which will
be routed through India Infrastructure Finance Company Limited
(IIFCL). The Indian Government has also approved a grant of USD 75
million as its contribution to the fund. The estimated total
project cost is about USD 90 billion.

GOI Raises Export Duty on Iron Ore
----------------------------------

10. (U) On December 24, in a bid to curb iron ore exports and to
encourage domestic steel production, the GOI raised export duties on
two categories of iron ore. Effective immediately, the government
raised the duty on iron ore lumps from five percent to ten percent
and on iron ore fines from zero to five percent. Industry experts
and mining sector observers have reportedly stated that the move
will adversely affect the mining sector. In June 2008, India
initially imposed export duties of 15 percent on iron ore products.
However, in November 2008, the GOI reduced export duty on iron ore
fines to eight percent, and a month later, in December, abolished
the duty on iron ore fines altogether. At the same time, the GOI
reduced export duties on all other varieties of iron ore to five
percent. The Finance Ministry notifications for the latest decision
are available at http://www.taxindiaonline.com.
11. (U) Earlier, Steel Minister Virbhadra Singh was quoted as saying
the competitiveness of the Indian steel industry would be seriously
jeopardized if iron ore exports continue unabated, since Indian
steel makers face an acute shortage of quality iron ore. The Steel
Ministry reportedly asked the Finance Ministry to impose a ten
percent tax on export of all grades of iron ore. The mining
industry, on the other hand, had been lobbying for the removal of
export duties on iron lumps altogether. According to the Secretary

NEW DELHI 00000031 003 OF 003

General of the Federation of Indian Mining Industry, the increase in
export tax will have a negative impact on the Indian steel industry
and the GOI should have allowed the steel industry to recover from
the global economic recession before imposing export duties.
Moreover, domestic industry does not consume iron ore fines, he
added. India is currently the third largest exporter of iron ore in
the world after Australia and Brazil, exporting almost 50 percent of
its total ore production.
3G Auctions to Miss Their Scheduled
January 14, 2010 Start Date, Yet Again
--------------------------------------

12. (U) The auction for third generation (3G) spectrum, which has
been repeatedly rescheduled over the past two years, is once again
going to miss the January 14, 2010 start date. The auction may now
be rescheduled for the end of February 2010. In December 2009, A.
Raja, the Indian Minister for Communication, had confidently
announced that the auctions were on schedule for a January 14 start
and were to culminate with the allocation of spectrum to winning
bidders by August 2010. The Department of Telecom (DOT) was going
to issue a notice inviting applications on December 8, 2009 with
December 21 as the last date for the receipt of applications. To
date, no action has been taken by the DOT and there is a noticeable
absence of clarification on next steps. The Ministry of Finance has
lowered its expectations for the likely revenues generated from the
auction and conflicting information exists on the modalities of the
auction. Even though the refusal to vacate the spectrum by the
Indian Ministry of Defense is cited as the reason for the delay,
other reasons, such as lower revenues among telecom service
providers and anticipated heavy investment requirements for the 3G
infrastructure, also may be playing a role in the auction's delay.

13. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi.

ROEMER

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