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28 February
2007 - News Updates
Gateway to prosperity - San Francisco Chronicle
An Indian bid for Dow Chemical - Forbes magazine
India lies in America's blind spot - San Francisco
Chronicle
Gateway
to prosperity
25 February 2007, San Francisco Chronicle, By Alan T. Saracevic
Tucked
away on a leafy college campus in this booming city of 7 million is a fiery,
54-year-old professor who wants to change the way
India
does business. Ashok Jhunjhunwala doesn't teach business, though. Or
accounting. He teaches engineering at the Indian Institute of Technology in
Chennai, one of the universities that helps make up
India's
world-class system of technical schools.
The IITs,
as they are known around the globe, have a long history of turning out top
engineers. Thousands of their graduates have flourished in the global
technology marketplace, with a good portion landing in the Bay Area. Many
have also stayed home, or returned to
India,
to help fuel the world's fastest-growing tech economy. But now academics
along with the country's business leaders want more for their students than
good jobs. They're hoping to instill in their graduates the spirit of
innovation and incubation that has been the earmark of Silicon Valley for
decades. They want to use technological invention to help
India
ascend. To put it bluntly,
India
is sick and tired of simply cranking out the world's best engineers. It now
wants to create the world's best ideas.
To do
so, it will borrow heavily from the model perfected in Silicon Valley, where
the academics of Stanford mix with bankers and business experts to create
opportunity. Not surprisingly, many of the top supporters of IIT's push into
"entrepreneurism" are the very graduates who found their way to the Bay Area
over the past 20 or 30 years. The lessons they've learned are now being
passed back to their alma mater.
Said
Jhunjhunwala “What's great about the U.S. is they allow you to fail." And,
in a weird way, learning to fail could be the key to
India's
future. The theory goes that fostering an entrepreneurial climate will help
the country overcome its widespread social problems, mostly centered on
poverty and illiteracy. The Indian intelligentsia believe deeply that the
solutions to these basic dilemmas will come from enterprise rather than
government. But that's not the only motivation. From a pure business
standpoint, innovating and creating its own Microsofts and Ciscos logically
stands to benefit
India's
place in the global marketplace.
M.S.
Ananth, serving as director of IIT Madras, understands the IT boom has
created entrepreneurial possibilities never imagined by chemical engineers
of his generation. And so he is overseeing the creation of a research and
development park on the grounds of IIT Madras, where 620 acres of "academic
land," as he put it, will be transformed into a center where private
industry can intermingle with academic innovation.
Jhunjhunwala and some of his colleagues, for instance, recognized that his
university did not want to get into the venture capital business. So, true
to his philosophy, he innovated. The professor created a business incubator
called the Tenet Group to help foster technology startups. But, in a classic
Indian twist, the mandate is quite different than what you might find on
Sand Hill Road. Rather than trying to build the next Yahoo or Google, hoping
to serve the world, Tenet's entrepreneurs are hoping to serve the needs of
rural
India.
As Jhunjhunwala put it: "We decided to focus on rural areas, where 700
million of
India's
1.1 billion people still live. We're trying to show that innovation can
happen in our own markets. In doing so, we're coming up with new ideas to
help the nation."
Walking
around the group's offices, which are integrated into the IIT campus, one
can see many examples of this "socially conscious entrepreneurship":
-- Midas
Communications Ltd., one of the earliest Tenet companies, has grown to
deliver telecom services to millions across
India
using breakthrough wireless routing. The company employs 600 in Chennai and
does business in 25 other countries.
-- Oops
Private Ltd. is creating ways to bring video conferencing to remote
villages, using the low-end technologies available. Oops has figured out a
way to do video conferencing on bandwidth as low as 20 Kbps, allowing kids
to attend classes with teachers hundreds of miles away.
--
ReMeDi Ltd. is using similar bandwidth optimization technology to help
villages that have no doctors. And they're delivering the systems for the
equivalent of $250.
--
Saloni Desi Crew is a 25-year-old entrepreneur working with Tenet to create
job training software for small villages so people can be trained to perform
data entry and indexing jobs for clients around the world. She has about 20
job centers in rural
India,
employing about 60 people.
The list
goes on. Low-cost weather stations. Rural ATMs that cost about $1,200
compared with the usual $10,000 to $15,000. Thin-client computers that cost
about $100. It's all coming out of an IIT system once derided for a lack of
innovation. Whether these ideas translate into real money and big companies
remains to be seen. As one of their signs in the hallway attests, their
dreams are big: "Doubling per-capital rural GDP of
India"
and "Be the change you want to see in the world." -- Mahatma Mohandas
Gandhi.
One of
the key obstacles facing
India's
push to create a high-flying startup culture is the environment in which the
students and entrepreneurs operate. There is no institutional memory to tap
into. No history or tradition of entrepreneurship to cull from. In its place
is a wide-ranging and successful IIT diaspora to draw from. In the Bay Area,
groups like the Indus Entrepreneurs and Pan IIT have formed to help Indian
startups stateside and in
India.
They offer practical advice and even venture capital in some instances.
"Successful IIT graduates in the U.S. want to do something to give back,"
said Monishi Sanyal, an IIT class of '70 graduate who is the CEO of
Intersoft Corp., a software firm in Santa Clara. "I paid 25 rupees a month
for my education," said Sanyal. That comes out to about 50 cents. "I have to
give something back." Sanyal was instrumental in creating the Pan IIT group,
which serves as a meeting place for alums.
Indeed, in Chennai, Jhunjhunwala sees his vision being realized. "Innovation
happens when three types get together," said Jhunjhunwala, visibly enthused.
"A professor, an experienced businessperson ... and a student who does not
know it can't be done."
Top of
the page
An
Indian Bid for Dow Chemical?
27 February 2007, Forbes magazine, By Ruth
David
Reliance
Industries, India’s largest company by market capitalization, is reportedly
seeking $2 billon in financing from banks to develop a gas field off India’s
east coast, and it may be maneuvering to acquire a global petrochemical
giant. The Times of India reported Tuesday that Chairman Mukesh
Ambani was in a position to raise $6 billion to buy foreign firms in concert
with private equity funds. According to unnamed sources, the target is
either Dow Chemical or a U.S. refinery.
The news
added to the rumors swirling around Dow. Its shares rose sharply Monday
following a report in the British Sunday Express that the blue-chip
company could get a record takeover bid worth up to $54 billion from a
consortium of private-equity firms.
Separately, Reliance has reportedly asked banks to submit proposals by March
5 for a 10-year, $2 billion loan to help it develop the Krishna Godavari gas
field. Reliance believes the field could produce as much as 80 million cubic
meters of gas of day — almost as much as India currently consumes. Reliance,
which operates India’s largest refinery, is also spending $3 billion to
build a petrochemical plant with a capacity of 2 million tons annually in
western India.
This
weekend, Reliance Industries said Ambani and his associates would buy
warrants convertible into shares, prompting speculation that he plans to
maintain a majority stake in case of a share sale. Ambani and his
associates, who own 50.62% of the company, will buy 120 million warrants
convertible into an equal number of shares. That will boost share capital by
8.6%. The warrants will be convertible at its current market price of 1,402
rupees ($31.83) over 18 months.
Overseas acquisitions aside, Reliance, which has a market cap of $44
billion, needs billions of dollars for its domestic ventures. It is planning
to sink $5 billion into the first phase of its push into the oil and gas
industry, and it intends to invest $5.6 billion in retail ventures through
2011.
Top of
the page
India
lies in America's blind spot
11 February 2007, San Francisco Chronicle, By Cheryll Barron
In 1998 after
India's
second round of nuclear tests, veteran geopolitical analyst and State
Department watcher Martin Sieff wrote "Everyone in Washington ignores
India".
He complained that
America,
obsessed by small, insignificant countries, was failing to court
India
and "secure an important ally." Not until November was there a sign of such
advice being heeded. The
United States
agreed to share nuclear technology with the subcontinent, but only after
fierce lobbying by rich and prominent Indian Americans, including Bay Area
venture capitalists.
On Jan. 31,
India's
Tata group, a conglomerate founded in the 1860s and today controlled by a
charitable foundation, bought Corus -- the Anglo-Dutch steelmaker that
employs 47,000 people and contains the heart of Industrial Age Britain, the
company once known as British Steel. Tata is one-fifth the size of Corus,
and the takeover was the biggest foreign purchase ever made by an Indian
company. Ratan Tata, the company's chairman said that outbidding a Brazilian
rival, Companhia Siderurgica Nacional, had led to "a moment of great
fulfillment for
India."
This $12.2 billion corporate takeover in late January, Europe treated like a
scary number on the Richter scale. Writing in the Independent, the upscale
paper of the British left, Hamish McRae -- one of the most sober and
respected economics writers for more than 30 years -- said the acquisition
signified "a shift of seismic proportions, something far beyond anything
that has occurred in our lifetimes." This corporation,
India's
largest after the buyout, has for decades given workers in its company town
subsidized housing and electricity, free purified water, hospital care and
schooling for children.
Large Indian corporations in industries ranging
from pharmaceuticals to software have quietly been growing bolder about
snapping up companies in the United States and Europe, and this reflects the
steady upward revision of economic forecasts for
India,
now that its gross domestic product has grown at an average yearly rate of
more than 8 percent for four years -- a pace that could reach double figures
by the end of this year. The latest projections from Goldman Sachs, the
international investment bank, show
India's
economy overtaking Italy's in size by 2012, France's by 2015 and Britain's
by 2016. Goldman Sachs also expects that while China's economy will be
larger than
America's
by the 2030s,
India's
could zoom past the
United States
by 2045.
Book publishing trends can be an index of what
the educated population of a country considers important. It has been more
than a decade since Indian writers like Salman Rushdie, Arundhati Roy,
Vikram Seth and Jhumpa Lahiri supplanted Latin American magical realists on
U.S.
lists of best-selling foreign fiction. Indian cookbooks do well, Bollywood
music has for some time been fashionable on university campuses, the
Indian-born M. Night Shyamalan has directed
Hollywood blockbusters, and yoga is so popular that
strains of it are tailored for Americans.
Accelerating in the 1960s, with the New Age
philosophizing that came with tie-dyed T-shirts and beads and was just as
superficial, the crowd-pleasing Indian cultural exports have satisfied
American appetites for aesthetic exoticism. By contrast -- and not only
because of an outsourcing boom during a deep recession three years ago --
Indian software companies' ever-greater importance in world trade has caused
deep unease as they have graduated from routine coding to systems
specification and software architecture.
Recently, The Chronicle reported on a joint UC
Berkeley and Duke University study revealing that a quarter of U.S.
technology companies created between 1995 and 2004 had at least one foreign
founder. But the paper did not record that the study also uncovered an
astonishing fact -- that more Indian immigrants were at the helm of
U.S.
engineering and technology startups over the period than migrants from
China, the United Kingdom, Japan and Taiwan combined. Nor did it say that
Indian-born entrepreneurs were principal founders of 26 percent of
immigrant-led
Silicon Valley ventures, just overtaking Chinese and
Taiwanese founders, who accounted for 24.4 percent of the total. Yet in the
week that these findings were released, The Chronicle splashed across its
arts pages a magnificent color spread about the Indian novelist Vikram
Chandra and his million-dollar book advance.
Many Americans have resented Indians'
traditional pride in their "ancient and spiritual civilization" and read
into it -- accurately or not -- an implication that it is superior to the
materialistic
New World's. There are Americans who still cannot
forgive
India
for aligning itself for 30 years with the old
Soviet Union,
even after that Bolshevik invention fell apart, and even though its rump,
Russia, now openly prefers China as an ally.
By some estimates, three years from now
China and
India
will together churn out 12 times as many engineers, mathematicians,
scientists and technicians as the
United States.
True, only a small proportion of these are educated to high standards today,
but that will improve. Even without any strategic political incentives for
treating
India as an honored friend -- such as hoping for help with
keeping Chinese expansionism in check -- it is impossible to see the United
States holding its own in the knowledge economy taking shape without leaning
heavily on Indian as well as Chinese workers of many stripes.
Meanwhile, China's foreign minister, Li Zhaoxing;
India's external-affairs minister Pranab Mukherjee;
and
Russia's foreign minister Sergey Lavrov,
were applauding the progress they had just made in a mini-lovefest that took
place this week in New Delhi. Notes Britain's
Times,
taking stock of the three-nation talks: "India, China and Russia account for
40 percent of the world's population, a fifth of its economy and more than
half of its nuclear warheads. Now they appear to be forming a partnership to
challenge the U.S.-dominated world order that has prevailed since the end of
the Cold War." Translation (for anyone who may be listening) in Washington:
Make diplomacy, not war.
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28 Feb '07
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