Incomplete

Hey my child, you are so wonderful,

Love the life and it is so beautiful.

 

Look at the sky,

And just dream to fly.

 

You’ve got wings,

and the bell just rings,

 

The name is called,

And in the jam you’re stalled.

 

A big waiting queue,

And the lucky are so few.

 

Get up and just move,

You are the best you’ve got to prove.

 

Don’t you get it wrong,

You’ve got to be strong.

 

The roads are narrow,

Little time to borrow.

 

The chance seem bleak,

But you can’t be weak.

 

Dream the dream,

How difficult it may seem.

 

Love or hate, Little time to show,

Give you best and just god to bow.

 

Time you shine,

Just don’t walk the line.

 

It seems like a wait,

Just standing on the gate.

 

Looking at the hindsight,

Life seems so bright.

 

Walk the walk,

And the love you should stalk.

 

God is with you,

Is all that I can view.

Tech support :)

 

There will be a time when it will rain,

Drops of tear and all the pain,

 

It may be difficult to see what I see,

there are endless pains in this hour of wee.

 

I’m a man, or am I a dot,

You in my life is all that I’ve got,

 

Breaking your trust,

I’ll feel like a dust, staying with you is a must.

 

All I can say is that my feelings are true,

Loving you always I’ll stay like a glue,

 

Remember the time that I showed you my world,

The beautiful square and it all stopped there,

 

You are the centre is all I’ve got to say,

Morning and night you are the one I pray.

 

The endless circles that I may just traverse,

You are centre is the only verse.

 

I’m pure is that what you think,

Please trust me even when you blink.

 

Walking in this world, I saw myself all alone,

Meeting you and all the pain was gone.

 

Endless nights that I have not slept,

Sitting and thinking I have just wept.

 

Life is so small, every second it counts,

Staying away and the sorrow just mounts.

 

The old lady that I see in pain,

All I could think was get her some grain.

 

Then I realize how important it is,

Life you know is not as easy you think.

 

I have been deprived of being loved,

It is so difficult when One gets shoved.

 

Caste and creed, do they matter a thing,

Be true to yourself, is what I sing.

 

I Love my mom and this is what she has taught,

Respect and love the women, that you’ve got.

 

She’s been my model, is all that I profess,

I admire you is something I must confess.

 

One think that I always wished,

Love both my ladies unblemished.

 

You get angry, You are sad,

I’ll keep you happy, I’m not all that bad.

 

My heart is strong, I may say.

But at times I have my way.

 

I may leave you one day,

But that’s when dead I lay.

 

Trust me my love, I’m brave.

My feeling for you will stay beyond my grave.

 

Promise me that you will be strong and you will not sway,

You will love me no matter what the people say.

 

Fight the people, fight the lord,

You love and trust me just tell our god.

 

Nothing more important nothing more sweet.

You walking the life standing on both my feet.

 

Love will keep us alive :)

Moments in life come and go,

Feelings is something that I may not show.

 

One thing for sure just does not stop,

My mind has you always on the top.

 

Dawn to dusk, With you my queen,

All I know is life is so mean,

 

Work and travel make you weak,

No Chance of us meeting in the week,

 

Back in the night,

Want you to be in my sight,

I pray to god, please get it right.

 

Its so difficult staying away,

There is a lot I have to say,

 

Come over is all I pray,

Happiness and joy, please dont go away.

 

Life is a mystery, So you see,

I want to sit with you under our tree,

 

The wonderful house and the out,

The dinner is ready you will shout

 

Life will be good is all I say,

Be with me forever, let just stay.

 

Take you away to that special place,

So that I can just look @ your beautiful face,

 

You know that I am not bad,

But for you I’m all this mad.

 

You gonna change my Life

Little things matter a lot,

Our heart is like the earthen pot,

 

It seems strong @ the outset,

but its really in the mindset,

 

It’s gentle from the inside,

Let all the pain subside,

 

There is just one device that it pings,

It is so happy when it sings,

 

All it wants to say,

I’m all happy with you but not Gay ,

 

Because I love you so much,

That every time you touch,

 

there is a special feeling inside,

And I promise that I will abide,

 

Come what may this will be it,

because deep down it’s lit,

 

The candles are serene,

Waiting for the queen,

 

Remember the heart  anytime,

and will be by your side all the time …

 

Random Thoughts on Engineering Life, the Uncertainty Principle and what not to do at the engineering college!

It has been exactly two and a half months since I graduated. It counts for some task; four years of engineering (non-activity). Apart from all the technology that one learns, there are things which one unlearns as well. In the technical jargon this may be seen as ones’ own Open source Movement. You get to meet people from different diversities and nomenclatures. One meets geeks, nerds, the all-rounder’s, the extroverts and the aw-shucks, name it and there’s a character resembling one common entity called a wannabe engineer. Very similar to the elements in a periodic table which are so close to each other but have inherent qualities which make them behave differently! In the case of elements a change of electron in the outer layer can make all the difference, whereas in humans a strand of DNA! I have since then carried on my own research and found out that what maketh thy engineers different are thy mutated DNA’s.

Lot of random thoughts ahh.., getting back to the Open Source Movement, I believe getting into engineering tends to give a person a wider understanding of the scheme of things. Especially if one is staying in a hostel you have to manage yourself and also manage the different types of people who can get onto your nerves. More or less you participate in lot of talk (small and big) late nights with peers who can even get the most shy of species up and talking. I met some of the most interesting characters at college. Let us discuss them without raising too many eyebrows:

Party Politics: I had people from Bihar to Bengal to Tamil Nadu to Maharashtra to Uttar Pradesh to Punjab to Gujarat to Rajasthan to Assam and finally the Andhra Pradesh in my class. First things first, day one to day last the class was a polarized set. The guys from Andhra (40%) would sit in the left portion thus forming the Left Parties!  Then come in the guys from Bihar-UP-Jharkhand-Delhi (BJP, Samajwadi, BSP, Congress) they constitute the Centre or opposition and the government. Then come in the DMK and AIADMK, MDMK the guys from Tamil Nadu. (They are the king-makers, since my college was in TN they were also the entities who would have firsthand knowledge of the questions in the exam) So which party do I belong to? Good question some of my good friends and myself were above party politics. We were the so called independents and radical thinkers! Our opinion hardly mattered! We formed a collective group called the Back-bencher’s radical Party. We belonged to none and all! We had a healthy interaction with all other parties, whereas the other parties had close to none with each other. So that shows the real state of a multi-cultural classroom.

People are always so much interested in what the other chap is doing? Dude what is that you are reading? Why you are going to library now? Why do you study so much when exams are a month away (all one can say is get away jerk!)? Why are you going to class now? Worst of them all, how did your paper go? What was the answer to that previous question? And many others, I can’t be counted out because at times I was acting as a jerk myself questioning people! And at the receiving end other times. Though being a part of the independent radical party people generally were least interested in what we were cooking! J

A smart question- what do budding engineers do at engineering colleges? Well let us build upon it.

First few days of engineering life people develop a sense of dissatisfaction for the college itself due to multitude of factors. A fact can be self verified by each one, no doubt! The factors could range from bad faculty, too many restrictions, lesser recess time, a bad canteen, poor library and to some extent even absence of quality birds (rare species @ engg colleges) can be a deterrent for liking the college. Though in the case of my college the facilities were excellent, but I never understood most of us at college were dissatisfied with our college for some reason or the other, which we could figure out sometimes right and at other times wrong. Yes there are guys who would read up Five Point Someone and get dissatisfied with life too and start demanding things which can only be a part of a well written novel!  But nonetheless the bottom line is people come to engineering colleges with misconceptions which are cleared in the very first week!

I knew guys who would sabotage the hostel when the electricity went off, threw dust-bins and tube lights from third floors (and beyond) of the hostel into the open space between corridors unhindered of consequences and even swear and shout at the warden. One guy locked the warden’s room with a lock and stuck a Pamela Anderson picture on his door (counts for some guts!). Guys chasing the college principal Diwali night and beating him up, and on Holi coloring the guard at the level crossing gate separating the college and hostel campus subsequently breaking the signals bringing to complete halt the busy Chennai-Bangalore train route for two hours! These guys were the most daring among all; some got debarred, got screwed but were back to college and even finished the course with good grades and a placement. So who is the king?

Exam time, cramming up at the last moment; Most of the guys just regurgitate what they assimilate from the boring classroom lectures, a perfect start for wannabes! I would say I would never be woozy before exams instead I avoided studying itself!!! I think the best thing to do in engineering is to choose subjects of your own choice. For E.g. I was an Electronics and Communication guy but I enjoyed reading about operating systems, distributed computing etc (part of computer science engg.) which helped me to develop a wider understanding of technology. Spending time reading newspapers and magazines and subjects of my interest intrigued me more than listening to most of my lecturers teaching optical communication and Electromagnetic theory. I knew if ever I was going for a PhD in Electronics I’m going to avoid these fields (though one can’t decouple the basic subjects but a basic knowledge was more than sufficient I guess because these subjects can get creepy)

One thing one has got to understand, students world over have to face moronic lectures and there’s is no escaping. For me I was turned off from academics for a while and that showed in my grades, from being a onetime college scholarship holder to rank 52 in the department, counts for some slump! But that did not hinder me, while most of my classmates were mugging class notes and getting good grades and walking away with cool scholarship awards I had acquired the leverage to study and enjoy subjects which interested me! For e.g. most of my classmates if asked would not know what a monostable multivibrator was, but they would solve questions in the exam courtesy some simple formula application,  look up the circuit diagram and design it on bread-board but they would be totally nonplussed if asked what it was? Why are we going for it? Why use a Linear Integrated Circuit, why not a Microprocessor, are their other ways to do the same?  No they aren’t answering this one, because all they want is mug up, puke, get good grades, impress the teachers and then get even better grades! After all this is what our education system demands.

I forgot to mention the guys who are really rock at engineering colleges. There are guys who possessed excellent oratory skills and they quickly gain fore-front organizing and narrating college events, and then there are multi-talented chaps like dancers and singers who are the famous people on the radar. It’s not just their talent but the sheer aura which makes them so famous. For E.g. I was part of a music band, a bassist (a lesser known member of a band by any regards, but surely the most important alongside drummer musically) but never quite was so well known because most of us surely lack that thing which these guys possess. I’m still in the process of understanding the economics of being well-known!

Smoke, liquor and joints are a favorite time-pass of the lesser known clan of engineers. These are the guys who spend a major time rolling leaves and searching some more for future. To be frank they are not the bad guys but just they belong to the same set of guys who dare beyond what people like us do! You can find them exploring innovative ways to fuck their neurons, by igniting it in chillums and pots and hookahs!! God give them some wisdom. It’s all up to the individual to realize what is right for them and what is wrong after all.

Finally I think I have more to say but just don’t have any more random thoughts right now; probably I’ll add some more Entropy when I’m back. I’m also not sure whether I really got my point across. Who emerges as the ultimate king after four years of non-activity is really a tough call, the nerds, the jerks, the wannabes or the dare beyond guys? hmm. It’s for everyone else to decide. All I can say is it is the best time of life where you can learn and explore and divert your energy into creative stuff and explore your hidden talents. It’s all there in engineering, a must have experience.

 

P.S: all comments and ideas are welcome!

Decoupling Theory – Truth or Myth? A Rogue Engineer turns Economist!

A few days back I was reading the book The World is Flat by Thomas L. Friedman, a bestseller by any regard. The book basically describes how Globalization 3.0 has emerged. This has not only brought countries and individuals close to each other; it proves how this has resulted in increased competition, the end result being a spur in innovation and increased cost advantage for companies and individuals. It also states the new fundamental tenet that globalization is the need of the hour and it’s good for everyone and not against particular individuals. It also states that in the present day global nations are very much interdependent on each other for economic growth and sustenance.

Decoupling Theory: The theory of decoupling suggests that emerging markets have broadened and deepened to the point that they no longer depend on the United States for growth, leaving them insulated from a U.S. recession.

The decoupling theory in no way shuns the globalization theory; all it says is that the major emerging markets primarily the BRIC (Brazil, Russia, India and China) countries have been showing increased economic activities and attracting foreign investments irrespective of the economic trends seen in the US. The theory took much flak off-late after the expose of the housing bubble in the US and subsequent Credit Crunch and Recession. The world markets saw a major downtrend, export driven sectors worldwide were hit by and large (E.g.: IT sector in India)

Demand for Commodities: Generally a recession results in a decreased economic activity, the demand for commodities is expected to fall and in some cases even spur cost-push inflation. The biggest critics of decoupling theory state that recession in the US will result in reduced demand for commodities and thereby hit the emerging economies because majority of their exports are commodity driven. But the supporters of this theory state that the recession is only going to affect the investments in the US and the general public would still be demanding the same level of commodities as before and that there will be no slowdown as such.

On the investment front, due to the declining dollar and interest rates cut by the Federal Bank resulted in diminished returns and hence investments started flowing to emerging economies where the returns were more lucrative (in India in terms of FII). So this resulted in increased economic activities in these economies for a while. However as the recession started finding its root in the export driven sectors in these economies, the companies started feeling the heat and subsequently they showed lower growth margins. Moreover as a result of rapid surge (due to increased foreign investments) these markets reached saturation and were sure to see the downfall. This was seen in the recent market downtrend in India where the stock markets have been falling ever since the start of the year. Now the decoupling theory supports it by stating that these stocks had already reached their peak (Technically say by the P/E) and the people thought that they were overvalued and their selling was imminent and bound to fall, the net sellers being FII. However the critics ridicule it stating that the market went into the bear mode due to increased risks pertaining to US recession and the liquidity crunch resulted in further keeping the investors from making huge commitments monetarily in these emerging economies.

Inflation, the critics of the theory state is an example of the developing nations to hold back the green buck (USD) and purposely devaluing their own currencies to make their exports competitive. This resulted in increased costs of imports for these countries. Now commodities like Crude oil went up. Now since it’s valued in dollars and these countries have devalued their currencies thereby passing on increased cost in their country triggering cost-pull inflation where the general input costs for production have gone up resulting in higher priced commodities, making it difficult for the common man. (For e.g. the RBI was accused of selling rupees and buying dollars to boost the export sector and curb inflation but did it work out? It only resulted in import getting costlier prices being passed on to the common man and thus increased inflation.) The supporters of Decoupling theory state that unlike general observation that due to the recession demand for commodities is going to go down, the opposite has happened and the increased economic activity and demand in emerging economies have pushed the prices up while the demand has reduced in the US supporting the theory further.

The increased per capita income in these emerging economies has resulted in improved standard of living and greater domestic demand for goods. Thus the local demand and supply has attained a greater share of GDP and greatly increasing the economic activity in the country. (for e.g. in India itself the rising standard of living has fuelled a great demand for electronic goods and connectivity leading to a boom in the telecom sector and subsequently in the semiconductor sector) The Economist a leading publication states the figure that the income level has seen a rise of 17% in emerging economies as compared to 1.5% in the developed ones.

Finally coming to Exports, figures state that emerging markets send half of their exports to the emerging markets itself. China’s total exports to US fell by 5% in the aftermath of housing bubble burst but exports to other Brazil, Russia and India was up by more than 60% and those to the oil producers by 45%. Moreover the export to US now contributes only 8% to Chinese, 4% to India, 3% to Brazil and 1% to Russia’s GDP. Thus the emerging economies surely have become more decoupled to the US than before. Moreover the domestic production and consumption has taken forefront.

Conclusion: The present US recession was initiated by the Sub-Prime mortgage crisis and the subsequent Credit crunch. This was followed by worldwide market downfall and at the same time the world witnessed the Food crisis (courtesy droughts, Floods, hoarding, Export bans, Bio-Diesel etc) and the Crude shock (courtesy OPEC’s bullying controlling the oil prices due to depreciating dollar and they trying to maintain their purchasing power, or because of the increased demands from China and India). The various reasons are yet to properly justified. Probably another recession in the US accompanied by a rapid economic activity in the emerging countries and devoid of basic commodity shocks is required to properly justify that the Decoupling theory stands or falls!

SEZ (Special Economic Zone) – An Overview, Challenges and Future

When the India’s ex- commerce Minister Mr. Murasoli Maran returned from a trip to China in late 90’s, he had witnessed something which would lead to revolutionary changes in the India’s EXIM (Export-Import) policy and then the SEZ’s were born.

What is an SEZ? It is a geographical region that has economic laws that are more liberal than a country’s typical economic laws. An SEZ is a trade capacity development tool, with the goal to promote rapid economic growth by using tax and business incentives to attract foreign investment and technology. Today, there are approximately 3,000 SEZs operating in 120 countries, which account for over US$ 600 billion in exports and about 50 million jobs. By offering privileged terms, SEZs attract investment and foreign exchange, spur employment and boost the development of improved technologies and infrastructure.

Moreover SEZ’s provide a medium wherein it not only attracts foreign companies looking for cheaper and efficient location to setup their offshore business, but it also allows the local industries to improve their export through a proper channel and with the help of the new foreign partners to the outside world at a very competitive price. SEZ’s offer relaxed tax and tariff policies which is different from the other economic areas in the country. Duty free import of raw materials for production is one example. Moreover the Free trade zones attract big players who want to setup business without any license hassles and the long process involved in it. Most of the allotment is done through a single window system and which is highly transparent system.  The bottom-line therefore is increased export and FDI (Foreign Direct Investments) enabling increased Public-private partnership and ultimately resulting in a development of world class infrastructure, boost economic growth, exports and employment.

Where SEZ’s have really flourished? The concept of SEZ’s was largely pioneered by China, wherein the SEZ’s contribute to 20 percent of the total FDI. Then the SEZ model was also successfully implemented in Poland and Philippines. In the former the SEZ’s contribute to almost 35 percent of the FDI inflows. Shenzhen in China has been at the helm of rapid economic development, after growing by a staggering 28 percent for the last 25 years.

Why SEZ’s are required? The SEZ’s are important in today’s context for the third world countries which have been in the race for rapid economic growth. There are many positives which emerge out of establishing an SEZ. Let us have a look on these factors.

For undertaking any kind of massive development program the government requires huge amount of funds. So it looks out for potential partners to help the government carry out the program. Now say for setting up an SEZ, the government may tie up with a private partner whose willing to invest in that area, thus a win-win situation for both. As in the government gets the capital needed to establish the required infrastructure and also the expertise. The private player on the other hand gets the right to market and use the SEZ’s with relaxed tax laws, thereby increasing its revenue generating capacity and also carrying out the economic growth of the company in a more efficient way with the better tax policies. Actually SEZ’s with relaxed import tariffs help the Import dependent and export driven industries to flourish by helping them develop manufactured goods at competitive prices.

 

SEZ’s create immense employment opportunities. The setting up of SEZ’s creates lot of indirect employment in terms of labour required. Then after the completion it enables employment in the relevant industries operating in the SEZ. Then there are lots of indirect employments generated wherein people start investing around SEZ. For example SEZ’s are townships of their own; thereby there are shopping malls, restaurants, amusement parks setup around to attract people, thus resulting in more economic development in that area.

 

Moreover SEZ’s improve the country’s foreign export. Because of the increased FDI and Private Equity presence, the local manufacturers get to tie up with these big names and export their products which now carry a better brand value, therefore helping in creating a greater demand for the goods of local manufacturers. Moreover the massive capital required for expansion is brought in form of FDI resulting in increased economic activity.

The increased exports from the country bring in more revenue for the country which improves the economic growth.

 

SEZ’s help in creating a balanced economic growth in a country if they are properly located and implemented leading to tapping of local talent and contributing to increased economic activity in the area.

 

 

Drawbacks:

The biggest challenges faced by SEZ’s in today’s scenario are the taking away of agricultural land from the farmers. The farmers are being paid disproportionate money which is not in lieu of the current land prices. The best example could be seen in the case of farmers from Kalinganagar in Orissa where the money given was disproportionate to as high as 1:10 with respect to the market rates. Moreover SEZ’s are leading to decrease in crop production (arable Land Grabbing!) thus slowing down of agricultural activity in the country. (Though it may help boost it in other ways by increased export of local goods, both processed and non-processed). More and more farmers are moving towards the lucrative manufacturing side in search of greater economic security. Moreover the greatest problem that seems to be emerging out is that arable land is being used for non agricultural purpose which could lead to food crisis and loss of self sustenance in future. For example: Nadigram district of West Bengal. But FDI could also help in providing our farmers to gain access to technological better farming methods.

 

SEZ’s in China were initially exempted from national Labor Laws (despite being a communist country!). This model sustained initially because the foreign investors were given the leverage to train the workers and even fire them if incompetent. This Hire or Fire policy initially helped in sustaining foreign investors’ confidence in the Chinese domestic labor competence, but in the long run such laws must be made more stringent once the confidence is reposed so as to hedge the workers from hostile company’ policies.

 

The SEZ’s if not properly located could lead to Supply Chain Management problems as well. Moreover improper planning could lead to unbalanced growth in the region giving an impression of pseudo-development. For example most of the SEZ’s in China are in proximity to the ports and also close to each other, while these have been at the helm of economic development most of the interior hinterland is vastly underdeveloped. SEZ’s could also lead to income disparities with divide between the rich and poor increasing if not properly planned.

 

SEZ’s mostly if setup for the manufacturing sector should be carefully planned to carry out proper pollution monitoring and control mechanism. Stringent measures may prove to be expensive but are also extremely important. Shenzhen in china has been the worst affected among SEZ’s in China where the sky is grey for most part of the day courtesy the polluting industries. The measures should be taken to make surroundings livable for multitude of people living in the SEZ’s. Moreover care should be taken to properly treat effluents from industries not to affect surrounding rivers. Also the SEZ’s should be carefully planned not to affect the natural habitat around (Gurgaon SEZ affecting the Bharatpur bird sanctuary)

 

India and SEZ:

Overview: The SEZ policy was first introduced in India in April 2000, as a part of the Export-Import (“EXIM”) policy of India. Considering the need to enhance foreign investment and promote exports from the country and realizing the need that level playing field must be made available to the domestic enterprises and manufacturers to be competitive globally, the Government of India in April 2000 announced the introduction of Special Economic Zones policy in the country deemed to be foreign territory for the purposes of trade operations, duties and tariffs. To provide an internationally competitive and hassle free environment for exports, units were allowed be set up in SEZ for manufacture of goods and rendering of services. All the import/export operations of the SEZ units are on self-certification basis. The units in the Zone are required to be a net foreign exchange earner but they would not be subjected to any pre-determined value addition or minimum export performance requirements. Sales in the Domestic Tariff Area by SEZ units are subject to payment of full Custom Duty and as per import policy in force. Further Offshore banking units are being allowed to be set up in the SEZs.

Are SEZ’s New to India? India is one of the first countries in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports. Asia’s first EPZ was set up in Kandla in 1965. With a view to create an environment for achieving rapid growth in exports, a Special Economic Zone policy was announced in the Export and Import (EXIM) Policy 2000. Under this policy, one of the main features is that the designated duty free enclave to be treated as foreign territory only for trade operations and duties and tariffs. No license required for import. The manufacturing, trading or service activities are allowed.  While EPZs are industrial estates, SEZs are virtually industrial townships that provide supportive infrastructure such as housing, roads, ports and telecommunication. The scope of activities that can be undertaken in the SEZs is much wider and their linkages with the domestic economy are stronger. Resultantly they have a diversified industrial base. Their role is not transient like the EPZs, as they are intended to be instruments of regional development as well as export promotion. As such, SEZs can have tremendous impact on exports, inflow of foreign investment and employment generation.

 

SEZ Act 2005: To provide a stable economic environment for the promotion of Export-import of goods in a quick, efficient and hassle-free manner, Government of India enacted the SEZ Act, which received the assent of the President of India on June 23, 2005. The SEZ Act and the SEZ Rules, 2006 (“SEZ Rules”) were notified on February 10, 2006. The SEZ Act is expected to give a big thrust to exports and consequently to the foreign direct investment (“FDI”) inflows into India, and is considered to be one of the finest pieces of legislation that may well represent the future of the industrial development strategy in India. The new law is aimed at encouraging public-private partnership to develop world-class infrastructure and attract private investment (domestic and foreign), boosting economic growth, exports and employment.

 

The SEZs Rules, inter-alia, provide for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments. Investment of the order of Rs.100,000 crores over the next 3 years with an employment potential of over 5 lakh is expected from the new SEZs apart from indirect employment during the construction period of the SEZs. Heavy investments are expected in sectors like IT, Pharma, Bio-technology, Textiles, Petro-chemicals, Auto-components, etc. The SEZ Rules provides the simplification of procedures for development, operation, and maintenance of the Special Economic Zones and for setting up and conducting business in SEZs. This includes simplified compliance procedures and documentation with an emphasis on self-certification; single window clearance for setting up of an SEZ, setting up a unit in SEZs and clearance on matters relating to Central as well as State Governments; no requirement for providing bank guarantees; contract manufacturing for foreign principals with option to obtain sub-contracting permission at the initial approval stage; and Import-Export of all items through personal baggage.

 

With a view to augmenting infrastructure facilities for export production it has been decided to permit the setting up of Special Economic Zones (SEZs) in the public, private, joint sector or by the State Governments. The minimum size of the Special Economic Zone shall not be less than 1000 hectares. Minimum area requirement shall, however, not be applicable to product specific and port/airport based SEZ. This measure is expected to promote self-contained areas supported by world-class infrastructure oriented towards export production. Any private/public/joint sector or State Government or its agencies can set up Special Economic Zone (SEZ).

 

ADMINISTRATIVE SET UP FOR SEZS: SEZs is governed by a three tier administrative set up

a) The Board of Approval is the apex body in the Department,

b) The Unit Approval Committee at the Zonal level dealing with approval of units in the SEZs and other related issues, and

c) Each Zone is headed by a Development Commissioner, who also heads the Unit Approval Committee.

APPROVAL MECHANISM OF SEZS: Any proposal for setting up of SEZ in the Private/Joint/State Sector is routed through the concerned State government who in turn forwards the same to the Department of Commerce with its recommendations for consideration of the Board of Approval. On the other hand, any proposals for setting up of units in the SEZ are approved at the Zonal level by the Approval Committee consisting of Development Commissioner, Customs Authorities and representatives of State Government.

 

How SEZ’s should be modelled to Benefit India:

Size Does Matter: I was reading an article and found out the following fact, China’s SEZs are huge. Shenzhen, the most important SEZ, covers 32,000 hectares. In India, there are just two or three privately developed SEZ, exceeding 1,000 hectares. Most of the others approved are less than 100 hectares.  But it is heartening to realize that the government has decided to up the ante and have made guidelines to have a minimum of 1000 hectares of area for approving an SEZ. It hardly needs reiteration that only a large sized zone can generate economic activity on some reasonable scale. In a small zone, the requisite infrastructure and services cannot be provided nor can multiple economic activities be promoted.

TAX Benefits:  The incentive package in India is quite liberal and may even be a shade better than that for Chinese SEZs. In fact, it is more or less on a par with the package for the existing EPZs. Duty free import of capital goods and raw materials, reimbursements of Central Sales Tax, tax holiday for specified period, 100 per cent repatriation of profits for subcontracting facilities are allowed. The Government has done well by extending incentives for the infrastructure sector to zone developers and the units as well. This can attract foreign direct investment for providing internationally competitive infrastructure.

Labor Laws:  We can learn from china where initially labor laws where relaxed so that the companies could adopt Hire and Fire policy, once the Private and foreign players gained confidence in the Chinese workers’ productivity, this was replaced by the Contract system. India should take cue from this and understand that the import-export business is highly dependent on uncertain international market conditions, rejection of consignments etc. hence a flexible labor policy is the need of hour in the SEZ’s.

Domestic Tariff Areas: We got to understand that the reason for the Foreign investors to invest in Industrial, Manufacturing sector in India is not only to cut down on their costs because of cheaper and competitive products but they also see the vast Indian consumer markets, which has seen great income rise and standard of living. So apart from exports itself, the domestic market itself provides immense opportunity for sale of products. The companies in SEZ being levied a full import duty on sale in domestic areas does not seem a bright idea. In this case SEZ’s will only promote export driven industries which are highly dependent on import of raw materials. To further make use of full potential of SEZ’s Industries which are capable of indigenous generation of raw materials should be provided with tax holidays in terms of benefits to facilitate competitive pricing in the domestic tariff areas.

Thinking about the Future and Possible Fallacies: As evidence over the years has shown, this single-minded pursuit of growth has lowered the efficiency and effectiveness of economic policies, besides incurring huge resource and environmental costs. The Chinese experience offers a valuable lesson for India. Neither the international nor the Indian experience with SEZs has been particularly happy. Globally, only a handful of SEZs, of the hundreds that exist, have generated substantial exports, along with significant domestic spin-offs in demand or technology upgradation. For each successful Shannon (Ireland) or Shenzhen (China), there are 10 failures – in the Philippines, Malaysia, Brazil, Mexico, Colombia, Sri Lanka, Bangladesh, why, even India. A 1998 report by the Comptroller and Auditor General (CAG) on export processing zones (EPZs) says: “Customs duty amounting to Rs. 7,500 crores was forgone for achieving net foreign exchange earnings of Rs.4,700 crores.

The Reserve Bank of India says that large tax incentives can be justified only if SEZ units establish strong “backward and forward linkages with the domestic economy” which is a doubtful proposition. Even the International Monetary Fund’s (IMF) Chief Economist Raghuram Rajan has warned: “Not only will [the SEZs] make the government forgo revenue it can ill afford to lose, they also offer firms an incentive to shift existing production to the new zones at substantial cost to society.”

As much as 75 per cent of the SEZ area can be used for non-core activities, including development of residential or commercial properties, shopping malls and hospitals. Developers will surely use this to make money via the real estate route rather through export promotion. This represents a potentially humongous urban property racket of incalculable dimensions. India will see a multiplication of “Gurgaon-style” development, under the aegis of big builders such as DLF, Marathon, Rahejas, Unitech, City Parks and Dewan.

 

Conclusion: The SEZ’s could drastically improve the economic activity in the country, make the country’s export competitive and globally noticeable, be net foreign exchange earner and provide immense employment opportunity. But this should not be done at the cost of bringing down the agricultural activities, Land grabbing and real estate mafia should be properly regulated so that the common man is not the net sufferer to get the net foreign exchange earner up and running. As compared to china where majority of the SEZ’s were setup by the government, similar should be adopted in India, if not fully it should be a public-private partnership and regulatory bodies should be properly managed to weed out fallacies. To be economically viable SEZ’s should be approved over a particular land area (greater than 1000 acres) for rapid economic growth in the area and for it to be profitable and self sustainable. Relaxed Tax norms, Labor laws and DTA regulations will surely attract foreign investment and major industries to setup industries in the SEZ’s making it profitable and meeting its desired results!

Childhood Summer Vacations

The best part of human life is undoubtedly the childhood. To be very precise say the 6-13 year age group is by far the best. I too enjoyed this time of my childhood doing all kind of stuff. One thing I loved about childhood was the summer vacations. It was that time of the year when exams were no tension and growing up quickly and trying to boss over people had been our utmost desire (though now I feel I’ve grown up too early!). But summer vacations were something special. For me it gave an opportunity to travel to our grandma’s place. I was brought up in the cities of Hyderabad and Delhi and going to Grandma’s place meant going back to the rustic roots of a place called Deoria in eastern Uttar Pradesh. The place is a small town, a district headquarter and pretty close to Kusinagar-the place revered by the Buddhist community. Okay now coming back to my grandma’s place, the funny thing was both my paternal and maternal relatives live in the same town. I am just guessing that majority of the young kids like staying at their maternal folks place than their paternal and I was no exception.

For me my maternal grandma’s place (nanis) held some special attractions courtesy:

First and the most important factor was the comic shop right in front of my nanis house. The guys name was Manoj. He had no issues with us taking any number of comics. Infact we used to get a dozen of them and finish them in a days’ time. While most of the people spent the good times of their lives reading Archies and DC comics, I was relishing some other homegrown masterpieces Nagaraj, Super Commando Dhruv etc. Actually in some of the comics these guys would team up with Spider-Man and Super-Man against evil forces and some cases even save them from the clutches of the Satans. (hehee that counts for some heroism). The graphics too were certainly no match to DC comics but nonetheless they were great! Apart from that I used to enjoy reading a lot of Chacha Chaudary, Saboo his friend who was from a planet I think Krypton ? That was Superman right? hmm. I forgot  :(   Then there were the detective duo of Ram-Rahim. There was also Pinky, Pluto etc which were on the lighter side and were pure fun. Back in hyderabad it was Tinkle, Gokulam, Jataka tales but none like Raj Comics On the whole reading these comics were a delight and I spent a good amount of my childhood summer vacations reading them, enjoying to the fullest.

Second there was a video game centre where you could play any console game for as cheap as Rs.1. So I used to spend major portion of the money and time playing games such as the Super Mario, Battle Tanks and Iceman. (Later my mom got it for me as a birthday gift so this attraction subsided gradually)

Third there were these large number of cousins, I actually cherished that the electricity was cut (power cut is a major problem in this UP) so that we could all gather on this huge terrace we had, water was sprinkled all over the place and cots and mattresses were put up, where we had fun time. Have dinner; talk etc. some my elder cousins (sisters) used to scare the younger ones (like me who had gathered from all parts of India to our nannies place) by reciting some scary stories. Anyways it was all pure quality fun. Childhood days were so good, i wish i could go back and have some more fun

Image: Raj comics characters

Information Technology (IT) in India- the challenges, Future Scope

The Indian information technology sector has been instrumental in driving the nation’s economy onto the rapid growth curve. According to the Nasscom-Deloitte study, the IT/ITES industry’s contribution to the country’s GDP has increased to a share of 5.2 per cent in 2007, as against 1.2 per cent in 1998.

Further, the IT and BPO industries are poised to clock revenues worth US$ 64 billion by the end of fiscal year 2008, registering a growth of 33 per cent with exports expected to cross US$ 40 billion and the domestic market estimated to clock over US$ 23 billion, according to a study. Simultaneously, the Indian IT services market is estimated to remain the fastest growing in the Asia Pacific region with a CAGR of 18.6 per cent.

India’s IT growth in the world is primarily dominated by IT software and services such as Custom Application Development and Maintenance (CADM), System Integration, IT Consulting, Application Management, Infrastructure Management Services, Software testing, Service-oriented architecture and Web services.

 

Challenges and Positives:

Can we stay Competitive? In the recent past we have seen that the Globalization 3.0 has resulted in Outsourcing and Off-shoring spreading to various other countries like China, Vietnam, Philippines and the Eastern European countries. In the wake of such competition can we still remain competitive? The answer is pretty much yes. We know that our assets are the talented pool of people who are not only competent technically but also linguistically better at English compared to the other competitors. Also the government support, labor pool, infrastructure, educational system, cost, political and economic environment, cultural compatibility, global and legal maturity, and data and intellectual property security and privacy give Indian IT companies and edge. But contradicting this is the Nasscom survey, which states that majority of the graduates coming out of the colleges today are unemployable. We need to introduce training programs in colleges to train the talent pool of students not only technically but also on soft skills. The training should also be imparted to the faculty to generate a better equipped talent force. These measures have already being taken by the IT companies, which also helps in reducing the training costs incurred by the IT companies after recruitment.

Dependency on the US: In the wake of the Sub-Prime crisis and subsequent economic recession in the US, the companies there started cutting down costs and one of them being IT expenditures. Because the majority of the IT companies in India have an export driven business model and majority of it is to the US, the companies have been facing a lot of heat. Some of the clients of these IT companies have gone bankrupt; some others have incurred heavy losses (Citigroup, Bear Sterns, and HSBC etc.) The IT companies should therefore explore options in Europe, the western Asia and Asia-Pacific and reduce direct dependency on the US.

Though it seems paradoxical but recession in the US is only going to make the Industries over there outsource more, primarily to reduce their costs by efficient application of IT, cheaper labor and cost effectiveness.

Indian IT firms outsourced and Off-shored! : It is observed that competitive markets have emerged in Latin America, Eastern Europe and South East Asia. Moreover there are emerging economies present in these areas like Brazil, Russia etc. The IT companies have already forayed in these countries for two primary reasons: First, it provides them to take advantages of cost-effectiveness in these areas due to new talent pool, Lower wages and greater advantage by making their exports cheaper and competitive. Second, places like Mexico have emerged as a major outsourcing and offshore development centre for the IT companies due to the proximity to their major business clientele in the USA. This not only provides cost-effectiveness, but also helping the client in round the clock service providing environment.

Rupee Appreciation and FII: In the wake of US crisis it was observed that the rupee appreciated due to the weakened US economy, Federal bank interest cuts and subsequent FII inflows in the country. Due to this IT companies in India incurred lower profit margins. On the flipside it surely gave them a wake-up call to effectively utilize the resources and bench strength. FII inflows and FDI in the IT sector surely helps in rolling out further expansion plans but excess FII also make the exports incompetent. So the govt. should take steps to manage excess FII inflows into the country and hedge the export driven sectors against the rupee appreciation.

IT SEZ’s: To further make the IT fraternity competitive, the govt. should take steps to develop IT Sez’s. This will reduce the excess tax burden on these IT companies. Moreover STPI (Software Technology Parks of India) have already enabled the IT companies and new startups to carry out the documentation and licensing and tax payment hassles through a single window system. Moreover the govt. should also relax norms for DTA (domestic Tariff Areas) to promote IT spending in the country itself at a lesser cost leading to development of the country.

Diversification In Verticals: In the wake of US crisis, one of the Indian IT company suffered major drop in profits because majority of its clientele in the BFSI (Banking Financial Sector and Insurance). This was the sector which took the brunt of the recession. And the company’ BFSI clients cut down on their IT spending leading to lower profits. Thus the companies should balance their presence in various verticals which will surely make them immune to unforeseen events.

Telecom and 3G: The roll out of 3G of mobile phones in India should be seen as a positive development for the IT companies. In the long run it is going to provide basic communication facilities in the rural areas of the country. Unlike the US where 3G brings luxury, In India it is going to provide basic communication and broadband access to the rural youth. This will result in dissemination of information and creating further talent pool for the country. We have already seen the IT industry moving to Tier-II and Tier-III cities to tap local talent and maintain cost-effectiveness. Moreover Growth in Telecom industry also demands greater IT application in terms of VAS (Value Added Services), Telecom Billing Solutions, IVRS etc.

Domestic Markets: Dalian in China has been growing as the major IT hub there. If actually compared China’s IT spending is five times that of India, most of it being domestically. This could be also seen in the organization of retail sector in China showcasing the presence of Retail majors like Wal-Mart there. Hence IT companies should also focus more on the domestic markets with major projects lining up inside the country as well for instance the Railways ERP project, the BSNL systems integration, networking projects, IT work from ministry of finance and private telecom companies, banks and others are offering multi-year contracts that are over US$ 100 million. Moreover multinationals have been lining up in India further strengthening the IT growth in India.

Capgemini, Europe’s largest consulting and computer services firm is gradually moving its internal support services to India.

After sourcing IT applications from some IT firms last year Wal-Mart will now expand its existing operations given India’s impressive IT capability to cover more firms and augment its work in the United States.

Intel-the globally renowned chip maker is looking to invest more than US$ 1 billion in India over the next three years in partnership with Indian and foreign hardware firms to prepare light weight personal computers.

Cisco posted over 100 per cent year-on-year growth in its SME business in India.

Oracle is expecting over 100 per cent growth in India for its CRM business on the back of increased technology awareness and need for cost-effective customer servicing.

Yahoo! Inc and Tata Sons subsidiary firm Computational Research Laboratories (CRL) have entered into a joint agreement to make available-EKA, a supercomputer (the fourth fastest) in the world for cloud computing research in India.

Dell India witnessed 80 per cent sales over last year with revenues to the tune of US$ 700 million.

World’s leading chip designer firm ARM is expanding its India design centre to make it the largest outside Britain.

IT biggies like Microsoft, IBM, Cisco, Oracle and a host of other IT entities are working overtime to tap the smaller and medium businesses.

Conclusion: Thus we observe that the Indian IT industry has been facing some challenges but if effective steps are taken then it will surely help it to remain competitive in the future as well.

 

Congress’ Political road map – Nonplussed or Nonchalant (A sequel to the New-Clear-Peace Deal article Posted on my blog)

Back to writing something, it’s been days I wrote anything worthwhile; the last one on FII’s required some research and understanding! Lot has changed meanwhile; the government may topple or just manage to escape through, the elections possibility for the month of November is not being ruled out. I have always been repugnant to writing on Politics; the very reason being it’s fuzzy for me. But surely it has it impact on Economics as well.

Now let us consider the situation where the govt. is toppled. What impact is it going to make on people of India and abroad?

                  First and foremost the nuclear deal will be put back into the box for a while? How long? No one knows. A lot will depend on who gains power in both the US and India. Mr. Obama (MS word spelling check recognizes Osama but not Obama, don’t worry sir you’ll soon make it if you do make it to the hot seat!) has been opposing all kinds of help to India courtesy Indians stealing all the jobs from the Americans and then he thinks India is getting too much in the nuclear deal and the US hardly anything. What about the Monetary support from the Indians for your election campaign sir? And if India TV (A Hindi news channel in India) is to be believed Mr. Obama is a great devotee of Lord Hanuman. So doesn’t it really make us think that all this is a publicity stunt by Mr. Obama? We have seen in the past and will surely see it in future. Political leaders everywhere will talk anything to appease the public for votes, but they ultimately end up doing things which will be in accordance of their own interest, or what the intelligence agencies want, or what the party demands for the good or bad! So Mr. Obama knows that outsourcing is not only good for the developing countries but a necessity for the developed nations. He also knows that nuclear deal will not only provide support in terms of technology and fuel but along with it comes economic and military co-operation. So no matter what; The deal is very dear to the US as well, irrespective of whether it’s Mr. Obama or Mr. McCain.

                      Second I can see why CPI is opposing (that’s what they can do), but why is that the BJP is opposing? Good question, is it because it’s compromising with our sovereignty. The answer is no, it is because they were trying to ink a similar deal but were turned down by the Bush administration. So they don’t want congress to sign this historic deal. The BJP wants to come to power and seal the deal.

                      Elections now what? While Congress has been crying foul that all the forces are trying to topple the govt.! Infact the strongest statement congress has made till date is that nuclear deal is more important for county’s security and they are willing to sacrifice the govt. for it. So now if the govt. topples then Congress will ride on the sympathy wave, showcasing its concern for the country. So if the govt. falls or if it stays then the congress is the one which is going to gain!

                         Won’t the high prices and oil crisis act as an anti-incumbent factor and work against congress coming to power again?  Yes, it will surely among the people in the metros? What about the rural India, the guys who make or break the government. Lot will depend on the Monsoon this year; if it’s good then it’s good news for congress. If it’s bad then congress can probably reserve its seat in the opposition for the next five years. But wait my rustic intelligence says won’t the people in the village ask the simple question of why the government toppled?  Yes, they will and probably they will think that it was unfair to congress and vote for congress in the elections. And did I just think that Mr.Chidambaran’s much criticized agriculture loan waiver was a plan for this time, they could see the govt. pushing for this deal, toppling and coming back to power after elections courtesy these sops! Probably yes. The inflation if not completely tamed will be atleast under control by that time. So no plans for guessing, it’s a well thought out move by the Congress. So the situation definitely seems more nonchalant for the congress!