GAGF01-Nov09 1 General Awareness: India Chapter Page 1. A brief of Indian History 2 2. Indian Political History & Growth 15 3. Developmental Indices 26 4. Social Sector Indices 65 5. India’s Foreign Relations 77 6. India – Interesting Facts 109

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General Awareness: India

Chapter Page

1. A brief of Indian History 2

2. Indian Political History & Growth 15

3. Developmental Indices 26

4. Social Sector Indices 65

5. India’s Foreign Relations 77

6. India – Interesting Facts 109

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Chapter 1 - Brief of Indian History

1.1 ANCIENT PERIOD: Ancient Indian history (3000 BC to 1200 AD) broadly consisted of the Indus Valley Civilization, the rule of Indo-Aryans, Pre-Mauryan period, Mauryan Dynasty, Post-Mauryan period, the Gupta period, the rule of Harshavardhana, and other kingdoms consisting of the Pratiharas, the Palas, the Senas, and the Chauhans.

Period Details Remarks / Highlights

3000/2500 – 1500 BC

Mohenjo-daro and Harappa flourished in the Indus Valley

This civilization puts India at par with other ancient civilization of the world. Indian sub continent can be traced to the Paleolithic and Neolithic Human inhabitation in the Indian subcontinent. Archaeological remains have been found at Sind and Punjab in current day Pakistan. Traces were also found in parts of Ambala, Saurashtra, Rajasthan, and West Bengal. This civilization is found to have used copper extensively and remains suggest that there was good town planning and efficient administrative structure.

1500 BC

Aryan tribes immigrated from the northwest. Their merger with the existing Dravidian inhabitants led to the evolution of classical Indian culture

The tribe was known to be semi-nomadic with a possible place of origin assumed to be from Poland to Central Asia. Since Aryans immigrated to a lot of places, the ones who came to India are referred to as the Indo-Aryans. Their superiority resulted in the submission of the Dravidian (Dasuyas) of Indus Valley civilization and their retirement to the south. They are found to have practised both social and political organization.

Pre-Mauryan period

This period consisted of various empires, Persian conquer, and establishment of Greek settlement in India. This period lacks written records.

The vedic / epic period of India saw the rise of various kingdoms between 1000 and 600 BC. The greatest epics such as Ramayana, Mahabaratha, and the Upanishads are credited to this epic age. The 16 Mahajanapadas, the 16 powerful kingdoms, rose before the start of Buddhism around 600 BC. Four important kingdoms of this period were the Magadha, the Avadh, the Vatsa, and the Malwa with Magadha being the most powerful, which started around 4th century BC through Saisunga Dynasty founded by Saisunga in 642 BC. Most popular rulers of the dynasty were Bimbisara, the 5th King and his son Ajatasatru, during whose rule Mahavira and Buddha were patronized, and the first Buddhist council was held after Buddha’s death in 478 BC. The period between decline of Magadha Dynasty and establishment of Mauryan saw the establishment of Nanda dynasty under Nandivardana.

326 BC Alexander the Great invaded India

Even though invasion of Alexander the Great belonged to the pre-Mauryan period, the invasion holds a lot of significance in the Indian history. It resulted in the establishment of Greeks, better awareness about disciplined army, enhanced road and sea trade, and exchange of art and literature, and restructure of Indian state affairs and society.

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322 – 182BC

Mauryan dynasty, the first historical dynasty in the Indian history

The Mauryan dynasty marked a glorious era of integration of territories, flourishing art, trade, commerce, and contact with rest of the world. The famous rulers of the era were Chandragupta Maurya, its founder, followed by his son Bindusara, known as Slayer of enemies (Amitrachates) by the Greek, and the most famous of the rulers Ashoka, brother of Bindusara, and the last capable ruler of the Mauryan Dynasty. Chanakya or Kautiliya was another marked personality of the era, who was the able minister and was known for his treatise on statecraft ‘Arthashastra’. This period saw Buddhism emerging as the major national religion. The period promoted art and architecture widely, the most striking monument being the pillar with four lions that continues to be the Indian emblem.

Post Mauryan Period

This period again saw the emergence of various kingdoms until the establishment of Gupta Dynasty in the 4th century AD.

The prominent kingdoms of this period include: the Sunga Dynasty, founded by Pushyamitra, who ruled for over 100 years. This was followed by the Kanvas, a Brahman dynasty founded by Vasudeva Kanva, the minister of Devabhuti, the last Sunga king, who ruled for the next 45 years. The other prominent kingdom was the Satavahanas, after whom the kingdoms disintegrated into various territories.

320 AD – 480 AD

Gupta Period

Lichchavis of Vaishali, one of the important independent kingdoms of the period merged with the state of Maghada, ruled by Chandragupta 1, through the marriage of Lichchavi Princess with Chandragupta 1. This marked the emergence of Gupta Dynasty, followed by other prominent kings Samudragupta, Chandragupta II, Vikramaditya, Kumaragupta, and Skandagupta. The Gupta Period is referred to as the Golden age. Even though the Guptas practised religious tolerance, this period saw the renaissance of Hinduism. Art, sculpture, painting, literature, and science flourished, alongwith, sound diplomatic ties with many countries including China, Greece, South Asia. The famous work of Kalidasa, the Iron pillar at Delhi belongs to this period.

606 AD -647 AD

Rule of Harshavardhana The rule of Harshavardhana is of eminence in the Indian history. During his rule, his was the only consolidated Hindu kingdom after the Gupta period; it marked the emergence of Muslim rule.

647 AD – 1200 AD

Other Kingdoms

The major kingdoms of this period are said to have been the Pratiharas, the Palas, the Senas, and the Chauhans, prominent of them being Prithviraj Chauhan, who fought the battle of Tarain I and II in the year 1191 and 1192. The death of Prithviraj Chauhan in the second battle saw the end of Chauhans and the emergence of Muslim rule in India.

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Kingdoms of the South The Satavahanas is one of the earliest southern kingdoms founded by Simuka in the 65BC. Satakarni was one of the most important kings. They constructed many Buddhist worshipping sites – the important ones being at Amaravati and Nagarjuna Konda. There were three major Southern Kingdoms namely, the Cholas, Cheras, and Pandyas. The Cholas, with the capital at Uraiyur, ruled with the emblem of Tiger. Karikala was one of the important kings. The Cheras, with the capital at Vanji, Karur, ruled with the emblem of Bow. Udiyanjeral was one of the important kings. The Pandyas, with the capital at Madurai, ruled with the emblem of Carp. Nedunjdiyan was one of the important kings. The Chalukyas (6th - 7th Century AD): Pulkeshin I founded the Chalukya dynasty and established its capital at Vatapi. Pulkeshin II (609 AD - 642 AD) was the most important king of this dynasty. According to the Aihole inscriptions, he defeated Harshvardhana on the banks of river Narmada in 619 AD. Narasimhavarman I defeated and killed Pulkeshin II and captured Vadani. Most of the Buddhist cover at Ajanta and Ellora was structured during the reign of the Chalukyas. Aihole was the temple town of this period. The Pallavas (560 AD – 903 AD): The Pallava dynasty was founded by Simhavishnu in 560 AD. Their Capital was at Kanch. Mahendranarman I was defeated by Pulkeshin II. Narasimhavarman I was the greatest king, and because he defeated Pulkeshin II and captured Badan, he was known as Vatapi-Konda. Narasimhavarman II constructed the shore temple of Mahabalipuram and the Kailashnath Temple of Kanchi. He was also a worshipper of Vishnu. He built the Vaikunthaperumal Temple at Kanchi. Aparajita Pallav was the last ruler and was defeated by Aditya Chola. Administrative Units of the Pallavas Names of the Chiefs Mandal (Province) Rastrik Nadu (District) Deshatric Village (Kottam - Group of Villages) Gram Bhojak The Rashtrakutas: Founded by Dantedurga in Deccan, their capital was located at Manyakhet or Malkhed. Greatest kings of the Rashtrakuta dynasty were Govind III (796 AD - 814 AD) and Amoghavarha I (814 AD - 978 AD) - He had written the first Kannada book - ‘Kabirajamarga.’ and Ratnamalika in Kannada. Kailash I built the Kailash Temple at Ellora (in 9th century). Administrative Units of the Rashtrakutas Rashtras - the provinces Visaya - the districts Bhukti - the villages The Cholas (850 -1200 AD): The Chola dynasty was founded by Vijayalaya in 850 AD. Earlier the capital was situated at Uraiyar. Later the capital was shifted to Tanjore. Raja Raja I (985 AD - 1014 AD) was an important king. He constructed the Siva Temple at Tanjore which is also famous as Raja Rajeshvar Temple. Rajendra I (1014 AD- 1044AD) was called the Napolean of South India. The Cholas were famous for naxal power and for their village administration.

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Administrative Units of the Cholas

• Mandlam the provinces

• Valanadusnadus the districts

• Taniyur the large villages

• The Village Assembly was constituted of: Urs- the assembly of common people Abha - the assembly of brahmins Nagaram - the assembly of merchants.

1.2 MEDIEVAL PERIOD: The medieval Indian history consists of the Delhi sultanate, Mughals, and Europeans in India

1175 AD – 1525 AD

Delhi Sultanate and Arrival of Portuguese

This period consists of the later part of the Hindu kingdoms and was prior to the arrival of the Mughals in India. The period saw a series of Muslim rulers, whose main motive seems to have been the spread of Islam and plundering the vast wealth. The first prominent consolidation of Muslim rule happened under Mahmud Ghazni and then by Mohammad Ghori, whose victory over Prithviraj Chauhan saw the end of Hindu Kingdom. Qutab-ud-din-Aibek, the slave of Mohammad Ghori, who was made the incharge in India, laid the foundation for the Slave Dynasty in 1206 AD after the death of Ghori. Another important ruler of the Slave Dynasty was Iltutmish, son-in-law of Aibek, who also constructed the Qutub Minar during his time. In due course, disintegration of the slave dynasty led to the establishment of Khilji Dynasty by Jalaluddin Khilji, which started in 1290 AD and continued till 1340 AD. Victory of Ghazi Malik Tughluq, a Turkish noble, over the last Khilji ruler, Khusru, saw the end of Khilji Dynasty and the emergence of Tughluq Dynasty. Tughluq Dynasty’s fate was sealed by the invasion of Timur, which paved way for the establishment of rule by Sayyids and Lodhis, who were later overthrown by Babur in 1525 and 1526 in the battle of Panipat, that later established the Mughal rule in India.

1498 Vasco-da-Gama lands at Calicut.

Even though India had flourishing foreign trade from time immemorial, it was enhanced from the time of Alexander with established trade routes through Afganisthan, Central Asia, Persia, and Syria. However, rise of Arabs in India blocked this route forcing Europeans to explore different sea routes. Portugal, known for its sea-faring experience and love for navigation and exploration, brought Portuguese to India with Vasco-da-Gama’s arrival at Calicut in 1498 and further establishment of trading centers and rule in India. Almeida was the first Portuguese Governor in India.

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1510 – 1590

Expansion and Decline of Portuguese

The second Portuguese Governor Albequerque expanded Portuguese occupation with capture of Goa in 1510, Bassein in 1534, and Daman in 1538. After a century of rule, the Portuguese rule started declining with the combined effect of defective administration by successors, religious intolerance, resistance from the Mughals, instability, and lack of financial support from homeland, and emergence of other European competition.

1526 – 1707

Mughal rule in India

Mughal, Chaghtai Turks, rule in India started with Babur after he defeated Ibrahim Lodi in the Battle of Panipat in 1526. Humayun succeeded Babur, after his death in 1530. Humayun faced opposition from the Sher Sha and Sur Dynasty and had to abandon his throne in 1540. After 15 years he ended the second Afghan rule and came to power in 1555. Akbar, the most successful Mughal king, came to power in 1556 after the death of his father, Humayun. Akbar followed a policy of reconciliation with the Rajputs and religious tolerance, and he was successful in consolidating the states and raised the Mughal empire to glory. Muhammad Salim also known as Jahangir, who ruled from 1605 to 1627, until his death, succeeded Akbar. Shah Jahan, who ruled from 1627 to 1658, succeeded Jahangir. He is well known for building the Taj Mahal, in memory of his Queen, Mumtaz Mahal, who died in 1931. Aurangzeb, the ablest son of Shah Jahan, succeeded Aurangzeb. Unlike his predecessors, Aurangzeb followed religious fundamentalism. He was the last great Mughal ruler who took Mughal empire to its greatest glory and made it the biggest of the empires existing then. The succession of rulers after Aurangzeb proved incompetent to maintain the Mughal kingdom. Other factors that led to the decline of the Mughals were the role played by other independent kingdoms and rulers such as the Sayyid Brothers, Rajputs, Jats, Sikhs, and the Marathas. Plagued by inexperience, petty quarrels, intrigues, and conspiracies, British East India Company marked the foundation of British rule in India through the Battle of Plassey in 1757 and consolidated with Battle of Buxar in 1764.

1.3 MODERN INDIAN HISTORY: It broadly consists of India’s struggle for Independence and carries through to the current day.

1600 East India Company constituted

The East India Co.’s presence in India started in 1600 with the grant of free trade by the Queen. Initially the British had to struggle with the Portuguese and the Dutch and found it difficult to exercise influence in the Mughal court. From time to time, they succeeded in gaining concession for the company. Disintegrating Mughal kingdom and superior naval power and support from home helped them to establish their rule from 1757 onwards. At the turn of the 19th century, Governor-General Wellesley began what went on to become 2 decades of accelerated expansion by way of either alliances with local rulers or military occupation.

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1602 Coming of East India Company

The East India came to India.

1608 First Officer of EIC to visit India

The first officer of EIC, Captain Hawkins, came to India in 1608 in the court of Jahangir, the then Mughal ruler in throne.

1613 First factory of EIC The first factory of East India Company was established in Surat.

1615 First English Ambassador

Sir Thomas Roe, the first English Ambassador, came to India during the rule of Emperor Jahangir.

1757 Battle of Plassey Siraj-ud-Daulah, the Nawab of Bengal was defeated by East India Co., under the leadership of Lord Clive, the first governor of Bengal. It is also referred to as the Black hole episode of the Indian History.

1760 Battle of Wandiwash It was the decisive battle fought between the French and English, which saw the end of French rule in India.

1764 Battle of Buxar The joint army of Mir Quasim, former Nawab of Bengal Suja-ud-Daulah, Nawab of Awadh and Shah Alam II was defeated by the English army under the leadership of Hector Munro.

1773 The Regulating Act

In1773, the British Parliament initiated a series of administrative and economic reforms in India. The post of Governor General for Bengal was created. Warren Hastings became the first Governor General of Bengal. The Governor General and his council had all the legislative powers. Supreme Court was established at Calcutta and Sir Elijah Impey became the Chief Justice of India.

1857 First War of Independence

It is also known as the Sepoy Mutiny, where sepoy from the Co.’s army rebelled against the Co.’s rule on the 10th May 1857 in Meerut that soon spread to other areas and civilian mutiny. It took more than a year to contain the rebellion after gaining military support from home. This is a very important turning point in Indian history, as this saw the end of Co.’s rule in India. India came under direct rule of the British crown after failed Indian mutiny from 1858 to 1947. Mangal Pandey was a prominent figure. He killed two British Sepoys at Barrackpore.

1858 Government of India Act

Direct Governance of British Crown over India.

1867 Formation of East India Association

Dadabhai Naoroji, a Parsi intellectual, educator, cotton trader, and early political leader, formed this association. He was the first Asian to be a British MP between 1892 and 1895. He is also credited to be the co-founder of Indian National Congress.

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1885 Indian National Congress founded

A.O. Hume, William Wedderburn, Dinshaw Wacha, and Dadabhoi Naoroji founded this organization also called the Congress Party or INC. It is referred to as the true representation of Indians, and was the strongest political and revolutionary organization in the pre-independence era with over 15 million members and 70 million participants in the struggle against British rule. It was initially formed for obtaining greater share of participation in the government for the educated Indians. However, with constant opposition from the government, its demand became more radical with the party having two factions consisting of moderates and extremists by 1907. The party was in many ways an umbrella organization with members drawn from radical socialists to traditionalists and other Hindu / Muslim conservatives. The organization has produced many great leaders.

1905 First partition of Bengal

Lord Curzon, Viceroy and Governor-General (1899-1905) ordered the partition of Bengal for improvement in administrative efficiency, where Bengali Hindu intelligentsia exerted considerable influence on local and national politics. This led to wide spread agitation and boycotting British products under the ‘Swadeshi’ movement.

1906 Formation of Muslim League

The All India Muslim league (AIML) was founded in Dhaka that later became the driving force behind the creation of Pakistan as a Muslim state in the Indian sub-continent. M.A. Jinnah, who was initially a member of INC and later became the president of AIML in 1916, negotiated the Lucknow Pact with Congress for separate electorate and weighted representation for Muslim community. Jinnah broke from congress in 1920 following launch of Non-cooperative movement by Gandhiji, which Jinnah disapproved. Later, the party put forward the demand for separate Muslim state. On 23 March, 1940, through Lahore Resolution, the league recommitted itself to creating independent Muslim state called Pakistan consisting of Sindh, Punjab, North-West Frontier Province, and Bengal. The resolution’s principles formed the foundation for Pakistan’s first constitution.

1909 Morley – Minto Reforms

Under these reforms, a separate electorate was made for Muslims during the leadership of Lord Minto. A series of constitutional reforms were announced, which then was followed by visit of King George V in 1911 who announced the reversal of the partition of transfer of capital from Calcutta to newly planned city, later came to be known as New Delhi.

1915-16 Home Rule Movement Lucknow Pact

Annie Besant started the movement in September 1916. Congress and Muslim league held their sessions at Lucknow, which strengthened the Hindu-Muslim unity.

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The massacre at Jalianwallabagh Rowlatt Act

Also referred to as the “Amritsar Massacre,” this happened on 13 April, 1919 on the day of Harvest festival, Baisakhi, and Sikh religious new year at Jalianwala bagh near Golden Temple, Amritsar. Under the command of British Brigadier-General Reginald Dyer, the British Indian Army opened fire on an unarmed gathering of men, women, and children. Since the entrance to the Garden was narrow and was bounded all sides with walls, the people could not escape the firing, which lasted for 10 minutes. Official sources place the death toll at 379, yet private sources place the fatalities to be over 1000 and more than 2000 wounded. This marked a catalyzed freedom movement in Punjab and also paved way for Gandhiji’s Non-Cooperation movement in 1920 and motivation for revolutionary leaders such as Bhagat Singh. Rabindranath Tagore returned his knighthood to the King-emperor in protest against the massacre. It eventually played a significant means of freedom movement in the Indian Independence movement. It gave unstoppable powers to the government to arrest and imprison suspects, without even having a trial.


Non-Cooperation Movement Khilafat Movement

Condemning Jalianwalla Bagh Massacre and retaliatory violence of Indians, Gandhiji launched the Non-cooperation campaign. In December 1921, Gandhiji was invested with executive authority on behalf of INC with reorganized constitution with the goal of swaraj. The movement saw the opening of party membership, formation of committees for improving discipline and mass national appeal. The movement included swadeshi policy – boycott of foreign goods, British educational institutions, courts, to resign from government employment, and forsake British titles and honors. However, the movement was called off in February 1922 after violent clash in Chauri Chaura, fearing the movement to take a violent turn. This was an anti-British movement started by two brothers Shaukat and Muhammad Ali.

1927 Simon Commission

For assessing the extent of forming a representative government in India, Britishers sent back Simon Commission, which was furiously boycotted by Indians and Lala Lajpat Rai (a Prominent Indian leader) who died due to lathi charge in a procession against the commission.

1929 Declaration of Poorna Swaraj

In the Lahore session of the Indian National Congress under the presidency of Jawaharlal Nehru, a resolution was adopted calling for complete independence from the British under the “Poorna Swaraj” and 26 January, 1930 was declared as “Poorna Swaraj Diwas”, Independence Day. It was to commemorate this date particularly that the Indian Constitution was formally adopted on 26 January 1950.

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1930 Salt Satyagraha

After the declaration of Poorna Swaraj, Gandhiji launched the Salt Satyagraha against the tax on salt in March 1930. It was highlighted by the famous Dandi March from 12 March to 6 April, marching 400 kilometers from Ahmedabad to Dandi, in which thousands of people participated and forced the British to imprison 60000 people, leading the movement to be one of the most successful campaigns against the British rule.

1935 Government of India Passed on the basis of the Simon Commission report, it envisaged the structure of the government under the direct governance of the ‘British Crown’.

1942-43 Quit India movement

This was the civil disobedience movement launched in August 1942 in response to Gandhiji’s speech calling for immediate independence. Gandhiji hoped to bring the British Government to the negotiation table that led to the arrest of Gandhiji and many other leaders. The movement though found mass support, the INC members themselves were divided, and it failed to achieve the immediate independence, which was its purpose.

1946 Cabinet Mission Plan This envisaged forming an interim government in India.

1947 India gains freedom

On 15 August 1947, Jawaharlal Nehru was sworn in as the first Prime Minister of independent India and Muhammad Ali Jinnah, founder of Pakistan, was sworn in as the first Governor-General of Pakistan at Karachi.


Hundreds of thousands die in widespread communal bloodshed after partition

Because independence was declared prior to the actual partition, the Governments were forced to keep public order. The partition plan called for safeguard of minorities on both sides and had not contemplated large population movement. There was complete breakdown of law and order on both the sides. This resulted in large-scale riots, massacre, and hardships that was ensued by one of the largest population movement – an estimated 20 million people (Hindus, Muslims, and Sikhs), based on the censuses from 1941 and 1951. The result saw widespread communal violence, loss of property, with estimated half a million dead and 12 million homeless according to Richard Symonds’s book, “The making of Pakistan.”

1948 Mahatma Gandhi assassinated by Nathuram Godse

On 30 January 1948, Godse assassinated Gandhiji by shooting at close range using Beretta semi-automatic pistol after the evening prayer and surrendered himself immediately. After the trial, Godse was sentenced to Death on 8 November, 1949 and hanged at Ambala Jain on 15 November, 1949.

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India becomes a Republic. Dr Rajendra Prasad is the first President of India

On 26 January 1950, India formally adopted the Constitution of India and made the transition from a British Dominion to a republic. Between the period of August 1947 and January 1950, King George VI was the head of the country and Louis Mountbatten and C. Rajagopalachari were the Governor-Generals of India from 1947 to 1948 and 1948 to 1950 respectively.

1952 First general elections; Congress government comes to power

Under the leadership of Jawaharlal Nehru, Congress party won an overwhelming majority in the first general elections held. Nehru also led the party to victory in the subsequent elections held in 1957 and 1962.

1956 The states are reorganized on a linguistic basis

Based on the recommendations of the States Reorganization Commission, the States Reorganization Act was passed. Old states were dissolved and new states created on the line of shared linguistic and ethnic demographics. This led to the separation of Kerala and Telugu speaking regions of Madras state and creation of Tamil Nadu. Similarly, creation of Maharashtra and Gujarat from Bombay state and later on creation of Punjab occurred.

1962 War with China and India loses

Sino-Indian war over the borders was fought and India lost the war that led to refocusing of arms build up and improved relations with United States. Though China withdrew from the Northeast, it continues to occupy Aksai Chin in Kashmir and the state of Arunachal Pradesh’s sovereignty as an Indian state is disputed by China.

1964 Death of Prime Minister Jawaharlal Nehru

He died on 27 May 1964 and was succeeded by Lal Bahadur Shastri as the Prime Minister of India.

1965 War with Pakistan; ceasefire declared.

The second Kashmir war between India and Pakistan ended with a ceasefire with no definitive outcome or altercation of the Kashmir boundary.


Tashkent Agreement reached. Shastri dies at Tashkent. Indira Gandhi becomes prime minister

Under the mediation of Soviet Government, India and Pakistan met at Tashkent in former USSR and current day Uzbekistan and signed the Tashkent Agreement. Lal Bahadur Shastri and Muhammad Ayub Khan were the signatories to the Tashkent Declaration of 10 January 1966, which stated better diplomatic and economic relations, non-interference in internal affairs, pulling back of forces, and better relations. Shastri died on the same night and Indira Gandhi then serving as Minister for Information and Broadcasting became the Prime Minister defeating right wing leader Morarji Desai.

1967 – 1969

Elections, Devaluation of Indian rupee and split of Congress

Congress party came to power with reduced minority amidst widespread disenchantment over rising prices, unemployment, economic stagnation, and food crisis. She successfully ended the Privy purse guarantee for former Indian royalty. Her proposed nationalization of Banks resulted in

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her suspension from congress membership. With the support of exodus of MPs, she formed the Congress (R) and continued to govern with slim majority.


Third war with Pakistan; Formation of Bangladesh; Elections and Nationalization of Banks

India intervened in Bangladesh Liberation War, which resulted in the independence of East Pakistan that became to be known as Bangladesh. Indira Gandhi and her party Congress (R) came back to power with increased majority, and many socialist and economic reforms including Nationalization of Banks were carried out.

1971 Twenty-year treaty of friendship signed with Soviet Union

India’s participation in the civil war resulted in strained relation with the US and India signed 20-year treaty with Soviet Union, breaking from the non-alignment.

1972 Simla agreement signed between India and Pakistan

2 July 1972 - India and Pakistan signed the Simla Agreement, after the War of 1971, for settling the differences by peaceful bilateral negotiations. Indira Gandhi, the Prime Minister of India, and Zulfiqar Ali Bhutto, the Prime Minister of Pakistan signed it.


India’s first atomic device exploded at Pokhran in Rajasthan Bihar Movement

On 18 May 1974, India tested its first Nuclear weapon at Pokhran in Rajasthan. Bihar Movement, initiated by the students in Bihar in 1974 led by Jayprakash Narayanan, veteran Gandhian Socialist, against misuse and corruption of Indira’s Government. Allahabad High Court found Indira Gandhi guilty of misusing Government machinery for election purposes.


Sikkim became an Indian state; Indira Gandhi declared state of emergency

On 26 April, Sikkim decided to formally join India and depose the Chogyal, the monarch of former kingdom of Sikkim. Economic and social problems and allegations of corruption caused political unrest and Ms. Gandhi urged the then President, Fakhruddin Ali Ahmed, to declare a state of Emergency:

• Civil liberties curbed

• Non-congress governments dismissed in states

• Many opposition leaders / activists imprisoned


Indira Gandhi’s Congress Party loses general elections. Janata Party comes to power

After the defeat of congress party in elections, Janata Dal, a union of opposition parties, came to power under Morarji Desai, the first non-congress Prime Minister.

1979 Janata Party splits; Seventh general elections held

Owing to unpopularity of Janata Government, the coalition crumbled and an interim government under Charan Singh was formed and general elections held

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Indira Gandhi returns to power heading Congress party splinter group, Congress (Indira)

In January 1980, Indira Gandhi came back to power.


Operation Blue Star. Indira Gandhi assassinated; son Rajiv Gandhi becomes Prime Minister

Operation Bluestar, undertaken by Indian forces to raid out Khalisthan Militants hiding inside the Golden Temple resulted in civilian death and damage to the temple and instigated communal tension within the Sikh community throughout India, following which Indira Gandhi was assassinated by her own Sikh bodyguards on 31 October 1984 at her residence. Her death caused communal violence in Delhi and Punjab, causing deaths of thousands, pillage. The Parliament was dissolved, and Rajiv Gandhi led congress party to its largest majority winning 450 seats out of 545 seats and became the youngest Prime Minister. Rajiv Gandhi initiated the loosening of License Raj, improved relations with the US, got involved in major expansion of telecommunications, Indian space program, and gave birth to software and IT sector.


India deploys troops for peacekeeping operation in Sri Lanka’s ethnic conflict. Goa becomes the 25th state of India

Indian peacekeeping force (IPKF) was sent to Sri Lanka to enforce agreement between Sri Lankan Government and Tamil rebels (LTTE), but it got entangled in outbreaks of violence and target of attack from Sri Lankan nationalists. Bofors scandal broke tarnishing the honest, clean image of Rajiv Gandhi.

1989 to 1990

Rajiv Gandhi’s Congress defeated in ninth general elections; minority government led by Janata Dal’s V.P Singh comes to power

1989 elections led to 2 minority governments. The first led by V.P. Singh under Janata Dal with support from BJP and left parties was withdrawn following the implementation of Mandal Commission recommendations to increase the quota in reservations for low caste Hindus, following which V.P. Singh resigned. Later, Chandra Shekhar led split Janata Dal (Socialist) with support from Congress that fell after Congress withdrew its support in 1991. V.P. Singh withdrew the IPKF from Sri Lanka in 1990.


Rajiv Gandhi assassinated. Congress government returned to power with P.V. Narasimha Rao as Prime Minister

On 21 May 1991, Rajiv Gandhi was assassinated at Sriperumbadur in Tamil Nadu by a female suicide bomber belonging to LTTE. The congress led government came to power with P.V. Narasimha Rao as the Prime Minister. During his period, opening of Indian economy to global trade and investment through liberalization of economy were initiated.


The dome of Babri Masjid in Ayodhya demolished by hindu fanatics; triggering widespread Hindu-Muslim violence

On 6 December 1992, the Babri Masjid, the Mosque disputed to have been constructed after the destruction, by the Mughal ruler Babur, of the temple built in memory of Rama’s birth (Ram Janmabhoomi). Babri Masjid was destructed by 1,50,000 strong VHP activists that led widespread Hindu-Muslim communal violence and saw more than 10000 dead and led to violence and destruction of Hindu temples in Bangladesh and Pakistan.

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Congress suffers worst ever electoral defeat as Hindu nationalist BJP emerges as largest single party. On May 16 AB Vajpayee is made the PM, until May 28; United Front Coalition forms government under Prime Minister H.D. Deve Gowda

After congress’s worst ever defeat, the BJP led coalition government came to power under A.B.Vajpayee, but it lasted only for 13 days after the coalition party withdrew its support. After that, H.D. Deve Gowda headed the United Front Coalition 14-party government whose government lasted less than a year as congress withdrew its support.


Congress withdraws support to coalition government; I.K. Gujaral sworn in Prime Minister

16-party government led by I.K.Gujral as Prime Minister again came to an end after Congress withdrew support in November 1997.


BJP forms coalition government under Prime Minister Atal Bihari Vajpayee. 2nd Nuclear test conducted at Pokhran

Fresh elections were held in 1998 and BJP formed the Government on 20 March, 1998. On 11 and 13 May, India conducted its second nuclear test at Pokhran, Rajasthan following which economic sanctions were placed by US and Japan on India.

1999 Inauguration of Delhi-Lahore Bus service

Vajpayee makes historic bus trip to Pakistan to meet Premier Nawaz Sharif and to sign bilateral Lahore peace declaration.

1999 Kargil war

The peace process was derailed with the discovery of infiltration by the Pakistan Army and Kashmiri militants in the Kargil –Drass sector in the Indian side of LOC. After over 2 months of intense high altitude fighting by the Indian Army supported by the Indian Air force, Pakistan accepted to withdraw its troop after the Washington Accord on July 4. Yet, the final clearing of jehadis happened on 26 July, which is celebrated as Kargil Vijay Diwas every year. Same year, Vajpayee led National Democratic Alliance came to power in September. The NDA was fraught with many scandals such as Tehelka and Communal violence in Gujarat sparked by the Godhra Train Massacre of 59 Hindu activists. But, 2003 saw speedy economic growth, political stability, and peace initiative with Pakistan.

2001 Parliament Attack

On 13 December 2001, the Indian Parliament was attacked by 5 armed Pakistan based Kashmiri militants and is one of the high profile attacks in which over a dozen were killed and led to the 2001-2002 India-Pakistan standoff.


Congress Party wins in general elections. Dr. Manmohan Singh is sworn in as Prime Minister

In January 2004, Vajpayee recommended early dissolution of the Lok Sabha and General Elections. The congress-led party won the election in May 2004 and Dr. Manmohan Singh became the Prime Minister of the United Progressive Alliance consisting of Congress and other socialist and regional parties and outside support of communists.

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Chapter 2 - Indian Political History and Growth GOVERNMENT OF INDIA IN BRIEF The Government of India operates within a framework of federal parliamentary representative democratic republic, whereby the Prime Minister of India is the head of government. It was established by the Constitution of India on January 26, 1950, and is the governing authority of a federal union of 28 states, 6 union territories, and 1 National Capital Territory. Collectively, the federal union is called the Republic of India. The Government of India consists of legislative, executive, and judicial branches. The Legislative branch is a bicameral parliament, comprising the Rajya Sabha (Upper House) and the Lok Sabha (Lower House). The Executive arm consists of the President, Vice-President, the Prime Minister, and the Council of Ministers the legislative wing. The judiciary branch is independent of the legislative and executive branches. The Supreme Court consists of a chief justice and 25 associate justices. The legal system as applicable to the federal and individual state governments is based on the English Common and Statutory Law. India accepts compulsory International Court of Justice jurisdiction with several reservations. 2.1 THE INDIAN CONSTITUTION & THE CONSTITUTIONAL FRAMEWORK The constitution of India draws extensively from Western legal traditions in its outline of the principles of liberal democracy. However, it is distinguished from many Western constitutions in its elaboration of principles reflecting the aspirations to end the inequities of traditional social relations and enhance the social welfare of the population. It lays down the framework defining the fundamental political principles, establishing the structure, procedures, powers, and duties of the government and spells out the fundamental rights, directive principles, and duties of citizens. Adopted after much deliberation by the Constituent Assembly that also acted as India’s first legislature, the Indian constitution was put into effect on January 26, 1950. Bhimrao Ramji (B.R.) Ambedkar chaired the drafting committee of the constitution. The constitution of India draws a balance between the traditional views of Gandhiji backed measures that would form a decentralized polity with strong local administration--known as panchayat --in a system known as panchayati raj, that is rule by panchayats and modernist leaders, such as Jawaharlal Nehru, for a parliamentary government and a federal system with a strong central government. Following a British parliamentary pattern, the constitution embodies the Fundamental Rights, which are similar to the United States Bill of Rights, and a Supreme Court similar to that of the United States. It creates a “sovereign democratic republic” called India, which shall be a Union of States. India is a federal system in which residual powers of legislation remain with the central government, similar to that in Canada. The constitution of India provides detailed lists dividing powers between central and state governments as in Australia, and it elaborates a set of Directive Principles of State Policy, as does the Irish constitution. The 395 articles and twelve appendixes, known as schedules, in the constitution make it one of the longest and most detailed in the world. Schedules can be added to the constitution by amendment. The twelve schedules in force cover the following: 1. Designations of the states and union territories 2. The emoluments for high-level officials 3. Forms of oaths 4. Allocation of the number of seats in the Rajya Sabha (Council of States--the upper house of Parliament) per

state or territory 5. Provisions for the administration and control of Scheduled Areas and Scheduled Tribes 6. Provisions for the administration of tribal areas in Assam 7. The union (Central government), state, and concurrent lists of responsibilities 8. The official languages

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9. Land and tenure reforms and the association of Sikkim with India 10. Provisions for Members of Parliament and Members of State Legislatures 11. Panchayat Raj (Rural Development) 12. Municipality (Urban Planning) Note: The Directive Principles, which is a part of the Constitution of India, are guidelines to be kept in mind while framing laws and policies by both the central and state governments. These provisions are not enforceable by any court as the principles laid down are considered fundamental in the governance of the country, making it the duty of the state to apply these principles in making laws. The principles draw its origins from the Directive Principles of the Irish Constitution and Principles of Gandhism. Directive Principles are classified under the following categories: Gandhian, economic and socialistic, political and administrative, justice and legal, environmental, protection of monuments, and peace and security. Amendments to Constitution of India Article 368 of the Constitution of India allows changes, namely, amendments to be made to the constitution. The Indian constitution is also one of the most frequently amended constitutions in the world. The first amendment came only a year after the adoption of the constitution and instituted numerous minor changes. Many more amendments followed, and till June 1995, the constitution had been amended seventy-eight times, a rate of almost two amendments per year since 1950. There have been a total of 94 Amendments to the constitution of India, as of 2009. Procedure of the Amendments to the Indian Constitution The method of an amendment to the constitution is considered to be a highly complicated procedure. Amendment can be made by various methods, which have been modeled based on the South African Constitution. The initial step of an amendment to the constitution is the introduction of Bills regarding it in any one of the houses of the Parliament. Simple majority of the Parliament can pass the Bills. Before sending the Bills for President’s assent, there can be a voting among the members of Parliament present. If majority of them vote in favor of the amendments, it is accepted. An amendment can also be finalized if two-thirds of the members of Parliament present vote in its favor. However, the number of voters should be more than half of the total number of members of the house. This method is known as ‘special majority of the Parliament’. In some cases, Bills for amendments to the Indian Constitution, finalized in this method, may also require the ratification of the Legislatures of at least half of the Indian States. Exceptions to passing of Amendments In spite of the presence of right to amend and the frequency of amendments, the basic structure of the constitution cannot be amended. The basic structure doctrine is the judge made doctrine whereby certain features of the Constitution of India are beyond the limit of the powers of amendment. Some of the Historical court rulings Some of the early cases questioning the amendments were made in the case of ‘Shankari Prasad vs. Union of India’ and ‘Sajjan Singh vs. State of Rajasthan’ wherein the power to amend was upheld under the Article 368. But in 1967, in the case of ‘Golak Nath vs. The State of Punjab’, the 11 judges bench of the Supreme Court pronounced that “Amendments which take away or abridge the fundamental rights cannot be passed.’ In the landmark case of ‘Kesavananda Bharati vs. The State of Kerala’, the 13 judge bench overruled the 1967 ruling, but upheld that ‘Article 368 does not enable the Parliament to alter the basic structure or framework of the constitution.’ The other famous rulings include ‘Indira Gandhi vs. Raj Narain,’ during the period of emergency and ‘Minerva Mills vs. Union of India’ in 1981, in which it was declared that clause (4) of Article 368 of the Constitution that excludes judicial review of constitutional amendments was unconstitutional. Nani Palkhiwala, the famous Jurist and Economist, was the key person in all the above cases.

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Salient Features 1. The Constituent Assembly was formed by the order of The Cabinet Mission in 1946. 2. Sachida Prasad Sinha was the temporary President of the Constituent Assembly. 3. Dr. Rajendra Prasad was the permanent President of the Constituent Assembly. 4. Dr. B.R. Ambedker was the chairman of the Drafting Committee. 5. B.N. Rao was the legal advisor of the Constituent Assembly. 6. The Constituent Assembly took 2 years 11 months and 18 days to prepare the largest written constitution

in the World. 7. Rs. 64 lakhs were spent on the making of the Constitution. 8. The original Constitution consisted of 22 parts, 395 articles but at present ,it has 22 parts, 444 articles and

12 schedules. 9. It was adopted by the Government of India on the 26th of November, 1949. 10. It was enforced by the Government of India on the 26th of January, 1950. Fundamental Rights 1. Part III (Articles 12 - 35) of the Constitution deals with Fundamental Rights. 2. Originally, seven Fundamental Rights were listed, but after the 44th Amendment, only six Fundamental

Rights are existent. These are (a) Right to Equality (14 - 18) (b) Right to freedom of speech (19) (c) Right against Exploitation (23-24) (d) Right to freedom of Religion (25-28) (e) Culture and Educational Right (29-30) (f) Right to Constitutional Remedies (32-33)

3. Right to Property used to be a Fundamental Right, but after the 44th Amendment, it became a legal right. Fundamental Duties Article (51-A) included in the Constitution in the 42nd Amendment, lays down 10 Fundamental Duties that citizens have towards the state. These are: a. To abide by the Constitution and show respect to the National Flag and the National Anthem. b. To follow the noble ideas of the freedom struggle. c. To protect the sovereignty, unity, and integrity of India. d. To defend one’s country. e. To promote common brotherhood and establish dignity of women. f. To preserve our heritage and culture. g. To protect the natural environment. h. To develop a scientific temper. i. To safeguard public property. j. To strive for excellence in all spheres of activity. Kinds of Bills Ordinary Bill - An ordinary bill can be introduced in either of the Houses and can be passed by a simple majority in both the Houses. In case of a deadlock, a joint sitting of both the houses is possible. Money Bill (Article 110) – A money bill is concerned with taxation and government spending. It can be introduced only in the Lok Sabha after prior recommendation of the President. Speaker of the Lok Sabha is the deciding authority whether the introduced bill is a Money bill or not. Financial Bill - A bill which is related to revenue and expenditure of the government but is not a money bill is a financial bill. Constitutional Amendment Bill (Article 368) - This bill can be introduced in either of the Houses of the Parliament. It can be passed only by a special majority.

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2.2 THE LEGISLATIVE AND ELECTIONS IN INDIA India is a constitutional democracy with a parliamentary system of government at the heart of which is the commitment to hold fair and free elections at regular intervals. The elections are the key parameters that determine the composition of the government, the membership to the two houses of parliament, the state and union territory legislative assemblies, and the presidency and vice presidency. Parliament of India The Indian parliament consists of two houses – the lower and the upper, namely, Lok Sabha and Rajya Sabha. Lok Sabha, the house of people, consists of direct representatives elected through the electorate in the general elections. The size of Lok Sabha is 552 members out of which maximum of 530 are from the states, 20 from the union territories, and 2 members to represent the Anglo-Indian community appointed by the President of India. The Lok Sabha is the stronger of the two houses. Rajya Sabha, Council of States, consists of members indirectly elected by the legislative assemblies of the states. The Rajya Sabha is designed to maintain federal character of the country with representation of the state in accordance with proportional representation by means of single transferable vote system. The population of the individual states determines the number of seats allocated for it in the council. The house consists of 250 members with 12 members nominated by the President with people having special knowledge or experience in literature, science, art, or social service. The Election Commission Of India The Election Commission of India is an autonomous constitutional body created to conduct free and fair elections for the representative bodies in India. It was established on January 25, 1950. The Constitution of India has vested in the Election Commission of India the superintendence, direction and control of the entire process for conducting elections for the Parliament and the Legislature of every State and for the offices of the President and the Vice-President of India. The law which governs all the elections in India as mentioned above is the Representation of People Act, 1950. The commission presently consists of a Chief Election Commissioner and two Election Commissioners. Originally, however, the commission had just one Chief Commissioner. Two Commissioners were appointed for the first time on 16 October, 1989, but their tenure lasted only till 1 January 1990. On 1 October 1993, two additional Election Commissioners were appointed. The commission has followed the multi-member structure since then, with decisions taken by majority vote. The Election Commission has a Secretariat at New Delhi consisting of about 300 officials. The Election Process Elections in India are events involving political mobilization and organizational complexity on a large scale. With elections held in 35 states covering an electorate of 670 million people (with over 389 million votes polled in the last 2004 14th lok sabha elections), it is one of the largest election process in the world almost twice that of the next largest, the European Parliament Elections. The process involves publishing of electoral rolls of all individuals who are citizens of India. People above the age of 18 years are eligible to enroll as voters. Pre-election process consists of announcement of dates for filing nomination by the candidates, and also for the polling and counting of votes. The Election Commission of India is entrusted with the process of conducting elections in India, which also lays down guidelines for the conduct of individual candidates, parties, and their campaign processes.

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The post election process involves the tallying of votes with the person garnering maximum votes in a constituency accorded winner. A single party or coalition of parties that has won the maximum number of seats in the constituencies represented is invited by the President to form the government with the Prime Minister as the head of the government, who is helped by the council of ministers called the cabinet. The party or its coalition must prove its majority in the floor of the house (Lok Sabha) in a vote of confidence by obtaining a simple majority, which is 50% of the votes in the house. Election of the President and Vice President The President and the Vice President are elected by the Electoral College consisting of members of Parliament (both Lok Sabha and Rajya Sabha) and elected members of the state legislative assembly (the Vidhan Sabha). The election is through the method of proportional representation using single transferable voting system. The President and the Vice President are elected for a 5-year term. The president is the Head of the state, first citizen of India, and the Supreme Commander of the Indian Armed Forces. The president is vested with executive, judiciary, and legislative powers, yet, the maximum authority is vested with the council of ministers headed by the Prime Minister. The vice president apart from the executive powers also has the legislative function of acting as the chairman of the Rajya Sabha. Presently, Ms. Pratibha Patil, the 12th (first woman) president in India, is holding office since July 2007. The Vice President is Mr. Mohammad Hamid Ansari holding office since August 2007. 2.3 FRAMEWORK OF POLITICS IN INDIA Politics in India is carried out in a framework of federal parliamentary multi-party representative democratic republic. As like any other democracy, political parties represent different sections among the Indian society and regions, and their core values play a major role in the politics of India. The representatives of the political parties, who have been elected through the elections, run both the executive branch and the legislative branch of the government. In the multi-party system, there are a number of national as well as regional parties. A regional party may gain a majority and rule a particular state. If a party represents more than 4 states, then such parties are considered as national parties. The development of Political system in India can be broadly categorized into 3 phases: Single Party dominance (1947-67): Being the political spearhead of pre-Independence Indian era, the Congress Party dominated nationally and largely at state level. In the 61 years since India’s independence, the Indian National Congress (INC) has ruled India for 48 of those years. Yet, the party has seen a gradual decline in the electoral seats since 1960’s. Congress Opposition System (1967-93): The party had till then enjoyed a parliamentary majority but for the first time, it saw the congress party coming to power with the reduced majority in the 1960’s owing mainly to the disenchantment over rising prices, unemployment, economic stagnation, and food crisis. The period also saw the friction within the party’s top level leadership. The congress’s continued rule was interrupted between 1977 to 1980, when the Janata Party coalition won the election owing to public discontent with the controversial state of emergency declared by the then Prime Minister Indira Gandhi. The Janata Dal won elections in 1989, but its government managed to hold on to power for only two years. The congress remained the most prominent party at national level, but started facing serious competition at the state level and increased cohesion between the opposition parties at the centre. Emergence of Multi-Party System (1990’s onwards): The decline of Congress party’s majority over the period can be attributed to both internal and external changes in the political set up. The congress was increasingly

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fractionalized, which led to organizational decline within the party. The external factors that contributed to the change were the more effective opposition, rise of other national and regional parties, and popular upsurge of historically marginalized sectors of society. Between 1996 and 1998, there was a period of political flux with the government being formed first by the right wing nationalist Bharatiya Janata Party (BJP) followed by a left-leaning United Front coalition. In 1998, the BJP formed the National Democratic Alliance with smaller regional parties, and became the first non-INC and coalition government to complete a full five-year term. The 2004 Indian elections saw the INC winning the largest number of seats to form a government leading the United Progressive Alliance, and supported by left-parties and those opposed to the BJP. In May 2004, Dr. Manmohan Singh was appointed the Prime Minister of India following the victory of the INC & the left front in the 2004 Lok Sabha election. Previously, Atal Bihari Vajpayee had taken office in October 1999 after a general election in which a BJP-led coalition of 13 parties called the National Democratic Alliance emerged with a majority. Formation of coalition governments reflects the transition in Indian politics away from the national parties towards smaller, more narrowly based regional parties. Some regional parties, especially in South India, are deeply aligned to the ideologies of the region unlike the national parties and thus the relationship between the central government and the state government in various states has not always been free of rancor. Disparity between the ideologies of the political parties ruling the centre and the state leads to severely skewed policy decisions. A look at the following table that summarizes the 2004 general election results shows that there are very few national parties, namely Congress, BJP, CPM, and CPI. The other parties of both the ruling and the opposition coalition consist of large number of regional parties some limited to just one state.

Party Vote (%) Seats Party Vote (%) Seats

United Progressive Alliance Indian National Congress Rashtriya Janata Dal Dravida Munnetra Kazhagam Nationalist Congress Party Pattali Makkal Katchi Telangana Rashtra Samithi Jharkand Mukti Morcha Lok Jan Shakti Party MDMK Muslim League Republican Party of India Jammu and Kashmir PDP


2.4 1.81 1.8 0.56 0.63 0.47 0.71 0.43 0.2 0.1 0.1

220 145 24 16 9 6 5 5 4 4 1 1 1

National Democratic alliance Bharatiya Janata Party

Shive Sena Biju Janata Dal

Shiromani Akali Dal Janata Dal (United) Trinamool Congress

Nagalands People’s Front Mizo National Front

22.16 1.81 1.3 0.9 2.35 2.07 0.2 0.1

181 138 12 11 8 8 2 1 1

Left Front Communist Party of India (M) Communist Party of India Revolutionary Socialist Party All India Forward Bloc Bahujan Samaj Party

5.66 1.41 0.43 0.35 5.33

59 43 10 3 3


Samajwadi Party Telugu Desam Party Janata Dal (Secular) Rashtriya Lok Dal AGP Jammu and Kashmir NC Others Independents

4.32 3.04 1.47 0.63 0.53 0.1 0.7

36 5 3 3 2 2 8 5

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Major Political Parties and present leadership 1. Indian National Congress – Founded in 1885 with an objective of obtaining greater share in government for educated Indians, it went on to play a pivotal role in the Independence movement. Post-independence the party was the obvious choice to lead the first independent government in 1947. Out of 61 years of independence, the party has been in power for 48 years, yet its majority has decreased through the years. Indian Prime Ministers from the Congress Party • Jawaharlal Nehru (1947 - 1964) • Gulzarilal Nanda (May – June 1964, January 1966) • Lal Bahadur Shastri (1964 - 1966) • Indira Gandhi (1966 - 1977, 1980 - 1984) • Rajiv Gandhi (1984 - 1989) • P.V. Narasimha Rao (1991 - 1996) • Manmohan Singh (2004 – present; re-elected) Present Leadership Party and Parliamentary Party Chairperson Mrs. Sonia Gandhi Leader in Lok Sabha Dr. Pranab Mukherjee Leader in Rajya Sabha (Prime Minister) Dr. Manmohan Singh Seats in Lok Sabha 206 Seats in Rajya Sabha 72 Political Ideology Socialism, Social Democracy, Populism, Centrist, Social Liberalism, SecularismPublication Congress Sandesh 2. Bharatiya Janata Party (BJP) – was created in 1980. It had its origin in the BJS (Bharatiya Jana Sangh) formed in 1950. It is a major center-right Indian Political Party with a strong focus on self-reliance, economic growth, and foreign policy driven by nationalist agenda. Its constituency is strengthened by fellow members of the set of Hindu nationalist organizations informally known as the Sangh Parivar in which the Rashtriya Swayamsevak Sangh plays a leading role. The BJP, in alliance with several other parties, led the Government of India between 1998 and 2004, under Prime Minister Atal Bihari Vajpayee and Deputy Prime Minister Lal Krishna Advani, its most senior leaders. It is the leading party within the National Democratic Alliance and leads the opposition. With mere 2 out of 543 seats in 1984, the party has made tremendous inroads in the Indian Political scenario by winning 88 seats in 1989 and an all time high of 183 seats in 1999 election. Present Leadership Party Chairperson Mr. Rajnath Singh General Secretary Mr. Arun Jaitley Parliamentary Party Chairperson Mr. A.B. Vajpayee Leader in Lok Sabha (Opposition) Mr. L.K. Advani Leader in Rajya Sabha (Opposition) Mr. Arun Jaitley Seats in Lok Sabha 116 Seats in Rajya Sabha 53 Political Ideology Hindutva, Indian Nationalism, Economic Liberalism, Integral Humanism, Conservatism, and Free Market Publication Kamal Sandesh

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3. Communist Party of India has its origin in Tashkent in 1920 but as the party maintains today, it is said to be founded in 1925. The party was embroiled in various conspiracies during the British rule and was legalized only in 1942. The party itself was divided between the left and right wing views which led to the split CPI(M) in 1964. Present Leadership General Secretary Mr. A.B. Bardhan Seats in Lok Sabha 10 Political Ideology Marxism Publication New Age (English) and Mukti Sangharsh (Hindi) 4. Communist Party of India (Marxist) was founded in 1964 after the split from CPI. The party has a strong presence in Kerala, West Bengal, and Tripura and heading the state governments in these states as of 2008. It is notable to see that the Party has held the majority in West Bengal since 1977 with continuous chief ministerial candidate in Mr. Jyoti Basu till his retirement in 2000. Present Leadership General Secretary Mr. Prakash Karat Leader in Lok Sabha Mr. Basudev Acharia Leader in Rajya Sabha Mr. Sitaram Yechuri Seats in Lok Sabha 16 Seats in Rajya Sabha 14 Political Ideology Marxism – Leninism Publications People’s Democracy (English) Lok Lehar (Hindi) The party also has many other daily, weekly, fortnightly, monthly, and theoretical publications. Other National parties of prominence include: 5. Bahujan Samaj Party led by Ms. Mayawati Kumari as the Party chairperson. The party was founded in 1984 with main political ideology as Dalit Socialism. It presently holds 20 and 6 seats in Lok Sabha and Rajya Sabha respectively. The publications are Adil Jatri and Mayayug. 6. Samajwadi Party was founded in 1992 as a fraction from the erstwhile Janata Dal, which was the main opposition party before the emergence of BJP. It is presently headed by Mr. Mulayam Singh Yadav as the party’s chairperson. The political ideology of the party is Democratic socialism. Presently it is the fourth largest party in the Lok Sabha with 38 seats. It has 16 seats in Rajya Sabha. It’s Secretary-General is Mr. Amar Singh and Leader in Lok Sabha is Mr Ram Gopal Yadav. It has its primary base in Uttar Pradesh, but in the recent times, it is making its presence in other states too. Its primary support base is from the Other Backward Castes (OBCs) and Muslims, and the Yadav caste. Other parties include Rashtriya Janata Dal led by Mr. Lalu Prasad Yadav, who is also the party chief and present central Railway minister and Nationalist Congress Party led by erstwhile congress veteran Mr. Sharad Pawar with a populist ideology. The party has a strong presence in Maharashtra. 2.4 JUDICIARY IN INDIA The Constitution of India vests independent power with the Judiciary outside the executive and legislative powers. The Constitution designates the Supreme Courts, the High Courts, and the Lower Courts as the authority to resolve disputes among the people as well as the disputes related to the people and the government. The

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constitution through its articles relating to the judicial system provides rights to question the laws of the government, if the common man finds the laws as unsuitable for any community in India. Legal System in India The world’s largest democracy, India, also has one of the most comprehensive legal constitutional laws in the world. A unique feature of the Indian Constitution is that, despite its Federal system and the existence of the Central and State laws with their predefined spheres of application, there exists a single integrated system of Courts, which administers both the central and the state laws. The Indian constitution, formed in the 1950, is based on the British Common Law, and incorporates some of the important US court decisions. The Constitution of India guarantees equal rights to all citizens, and prohibits discrimination based on race, ethnicity, gender, caste, and religion; it also allows universal franchise, thereby making the Indian electorate the largest in the world. The Fourth Part of the Constitution contains what are called “directive principles of state policy”, which require the government to set goals for the welfare of the people, such as a minimum wage, jobs for people from disadvantaged backgrounds, and subsidized medical care. Hierarchy of Courts: As the name suggests, Supreme Court of India is the highest judiciary authority in India comprising under it the High courts for each state or groups of states. This includes both the civil and criminal divisions. Under the High courts come the states’ own subordinate courts, which are divided into judicial districts that are presided over by the District and Sessions Judge. The lower courts below are divided as per the divisional jurisdiction, namely, Civil and Criminal. The Criminal jurisdiction consists of the Courts of the Chief Judicial Magistrates, and Judicial Magistrates of 1st and 2nd class. The Civil jurisdiction consists of Courts of Munsifs, Sub-judges, and civil judges. The Supreme Court of India and the High Courts are the two constitutional courts that are vested with major powers to protect the Fundamental Rights of the citizens and also to interpret the Constitution and other laws. The Supreme Court of India: The Supreme Court stands at the helm of the Indian Judicial System. It is located in the capital city of New Delhi, and comprises of the Chief Justice of India and 25 other Judges who are appointed by the President of India. The Supreme Court of India was inaugurated on the 28th January 1950, just two days after the Constitution of India came into force. It has many benches for litigation and its exclusive original jurisdiction extends to any dispute between the Government of India and one or more States; or between the States themselves. It also has an advisory jurisdiction wherein the President can always seek advice on any matter of law. The Law pronounced by this court is binding on all courts within India and the Court has the power to punish anybody for its contempt. The High Courts: There are total 21 High Courts in India, each of which stand at the head of the concerned States administration, while three of them have jurisdiction over more than one State. They work under the direct guidance and supervision of the Supreme Court of India. However, no direct administrative control is exercised by the latter that may in any way affect the functioning of the High Courts as independent judicial institutions. Every High Court has a Chief Justice and such other Judges, which the President may appoint from time to time. Decisions of the Supreme Court are considered law of the land and are binding unless overruled by a larger bench of the same court. High Court decisions are binding to the extent of their respective state jurisdiction. The Bar Council of India: The Law education dates back to 1857, when it was taught through the law department of the Universities in Calcutta, Madras, and Bombay. But it was in 1961, through the efforts of The Parliament of India, The Bar Council of India was established as the All India statutory body for all the laws governing the Indian legal profession. Bar Council of India directs the legal education pattern in India.

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The primary responsibilities of this body was:

• To recognize the law degree from universities, as one of the qualification for a graduate’s enrolment as an “advocate”, and

• To introduce stringent legal education standards along with curricular specifications, so as to prevent the mushroom growth of sub-standard law schools.

Law Education in India: Over 500 law colleges and universities in India offer the LLB professional degree course. Students, who opt for a three-year LLB degree course, have to be a graduate in any discipline with 50 per cent marks. For the five-year integrated law program, the minimum requirement is 10+2 with 50 per cent marks. Generally, the students of the five year law degree course are selected on the basis of their performance in an entrance test which comprises objective papers on general awareness and legal aptitude. For the three year degree course after graduation, different universities follow their own criteria either merit/marks based on a combination of merit and testing. Premier Institutes teaching Law in India:

• National Law School of India University, Bangalore

• Indian Law Society, Pune

• Bangalore University Law College

• Law Faculty, Delhi

• The National Academy of Legal Studies and Research (NALSAR University of Law), Hyderabad

• National University of Juridical Sciences (NUJS), Calcutta The Advocates Act, 1961 Realizing the importance of an integrated Bar and the need for Reforms of Judicial Administration, the Indian Bar Committee in 1951 made some recommendations relating to the Bar and to Legal education. These recommendations were endorsed in 1958 by the Law Commission in its Fourteenth Report on Reforms of Judicial Administration and urged the Government to implement the same. It was in 1959 that the Legal Practitioners Bill, which incorporated these recommendations, was introduced in the Parliament, which was to be later on adopted with the new name of Indian Advocates Act, 1961. The main features of the bill included:

• The establishment of an All India Bar Council and a common role of advocates with the right to practice in any court in any part of the country.

• The integration of the bar into a single class of legal practitioners known as advocates.

• The prescription of a uniform qualification for admission of persons as advocates.

• Division of advocates into senior advocates and other advocates based on merit.

• Autonomous Bar Councils creation, one for the whole of India and one for each state. As the Bill was a comprehensive measure, it repealed the Indian Bar Councils Act 1926 and all other laws on the same subject. Status Of Legal Profession In India In Perspective To The Entry Of Foreign Lawyers & Law Firms Since India is one of the founder members of WTO including GATS, it will have to enter into some negotiations, with regard to opening up of its service sector, which includes Legal Services to the Foreign Service suppliers (Foreign lawyers, Foreign Legal Consultants, and Foreign Law firms). Law has a national character as it is a part of local culture and life. This poses as an obstacle to cross-border trade in legal services. In India, the legal profession is governed and regulated by the Advocates Act, 1961. In view of permitting the foreign law firms in India, the provisions of the Act that need consideration include:

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• Section 24 states that only an Indian citizen will have the right to practice and also be enrolled as an Advocate in India.

• Subject to this Act under ‘Reciprocity’, a national of any other country may be admitted as an Advocate on a State roll, only if the citizens of India, duly qualified, are permitted to practice law in that other country.

• Subject to the provisions of the Section 47, the Bar Council of India may prescribe the conditions, subject to which foreign qualifications in law obtained by persons other than citizens of India shall be recognized for admission as an Advocate.

The E-Justice System: One of the major challenges today in delivering justice is establishing a proper E-Justice system. The advent of information technology has changed the mode of working in almost all the spheres of life. The justice delivery system has also been benefited by this technological revolution. The “E-justice system” has already found its existence in India. It would be in the interest of Indian judicial system that a sound and effective ICT training must be imparted to the Judges, Lawyers, professionals, and students. The concept of e-learning in India has already taken a shape, and it is proceeding in the right direction. E-learning can provide valuable inputs and training to the crucial members of judicial system in India. Benefits of E-Justice: • Reduction of backlog of cases • Decreased cost • Increased efficiency • Better witness protection program Some of the threats faced in establishing E-Justice system: 1. Cyber terrorism

a. Privacy violation. b. Secret information violations and data theft. c. Demolition of E-governance base. d. Distributed Denial of Services (DDOS) attack. e. Network damage and disruption.

2. Cyber extortions 3. E-mail manipulations

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Chapter 3 - Developmental Indices

Since the commencement of economic reforms in 1991, successive Governments have implemented strong measures to liberalize the business environment and boost industrial growth. The elimination of licensing requirements for all but six industries ushered in an era of competition and imparted dynamism to the industry. Substantial reduction in import tariffs on raw materials and intermediate products, coupled with the rationalization of excise duties, have eased access to inputs and reduced costs. In order to enable the industry to imbibe state of the art technology and global practices, the Government has been welcoming Foreign Direct Investment and collaborations through liberalized approval procedures. India has witnessed a strong economic growth of over 8 percent in the period 2004 – 07 with an aim to achieve 9-10 percent growth in the next 5 years. The global recession and financial crisis will hamper this growth to certain extent, but overall proper policy insulation against the global meltdown should assist in keeping up the momentum. With the rapid growth of the economy, the importance of removing infrastructure constraints has increased. Policy has changed gradually under the pressure of rising gaps between demand and supply of infrastructure and deteriorating quality of assets. Against these conditions, this section takes a close look at major developments and initiatives in each of the key infrastructures such as:

• Transport (Railways, Road Transport, Civil Aviation, Ports)

• Power (Thermal, Hydro, and Nuclear)

• Telecom 3.1 RAILWAYS Indian Railways is the world’s fourth largest rail network and second largest rail network under a single management. It is also the world’s fourth largest freight carrier. Contributing to the development of India’s industrial and economic landscape for over 150 years, it accounts for about 2.3 per cent of GDP and employs about 1.5 million people directly. Indian Railway consists of an extensive network spread over 109,221 km, encompassing about 6947 stations and 17.7 million passengers.

History of Indian Railways

Year Details 1832 A plan for a rail system in India was first put forward 1844 The then Governor-General of India Lord Hardinge allowed private entrepreneurs to set

up a rail system in India. Two new railway companies were created.

22 December 1851 The first train in India became operational and was used for the hauling of construction material in Roorkee.

16 April 1853 The first passenger train service was inaugurated between Bori Bunder, Bombay, and Thane. Covering a distance of 34 km (21 miles), it was hauled by three locomotives, Sahib, Sindh, and Sultan. This was the formal birth of railways in India.

By 1875 About £95 million were invested by British companies in Indian guaranteed railways

By 1880 The route mileage of this network was about 14,500 km (9,000 miles) by 1880, mostly radiating inward from the three major port cities of Bombay, Madras, and Calcutta

By 1895 India had started building its own locomotives.

1896 Sent engineers and locomotives to help build the Uganda Railway 1896 – 1901 Independent kingdoms built their own rail systems and the network spread to the regions

that became the modern-day states of Assam, Rajasthan, and Andhra Pradesh

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1901 A Railway Board was constituted. For the first time in its history, the Railways began to make a tidy profit.

1907 Most of all the rail companies were taken over by the government.

1908 The first electric locomotive appeared.

First World War period

The railways were used to meet the needs of the British outside India. The railway suffered immensely and was in a poor state by the end of the First World War.

1920 The government took over the management of the Railways and removed the link between the financing of the Railways and other governmental revenues: a practice that continues to date with a separate railway budget.

Second World War

The railways as rolling stock was diverted to the Middle East, and the railway workshops were converted into munitions workshops.

1930 Deccan Queen, India’s first deluxe train, starts operation. The train is still in operation and has lots of firsts to its credit - It was India’s first superfast train, the first long distance electric hauled passenger train, and one of India’s first vestibuled trains. The Deccan Queen was the first to have a Ladies Only car, and amongst the first to feature a diner, dining car.

1947 At the time of Independence, about 40 percent of the railways went to newly created nation of Pakistan Forty-two separate railway systems, including thirty-two lines owned by the former Indian princely states, were amalgamated as a single unit, which was christened as the Indian Railways.

1951-52 The existing rail networks were abandoned in favor of zones in 1951 and a total of six zones came into being in 1952

1984 India’s first and Asia’s fifth, Calcutta Metro started operation.

By 1985 Steam locomotives were phased out in favor of diesel and electric locomotives.

1987 – 1999 The railway reservation computerization began in 1987. In 1989, the train numbers were standardized to four digits. The nationwide CONCERT system of computerized reservation became operational on 18 April 1999.

1998 Konkan Railways, a company of Indian Railways, started.

1999 Darjeeling Himalayan Railway becomes the second railway site in the world to be designated a world heritage site.

2000 Indian Railways website deployed.

2001 Freight services resumed between India and Bangladesh after a gap of 25 years.

2002 Indian Railways began online train reservations and ticketing through internet. Delhi Metro became operational.

2003 Kalka-Shimla Railways completed 100 years. Presidential Saloon, a pair of twin coaches (numbered 9000 and 9001), built in 1956 and last used in 1977 reserved for exclusive use by the President of India, was used after a gap of 26 years.

2004 Fairy Queen, World’s oldest steam locomotive built in 1855, invoked by Rajasthan Government.

2005 Indian Railways introduced E-Ticketing. Being declared as a loss making institution, Indian Railways recorded impressive growth and turned profitable from 2004-05 onwards and today it is the second largest profit earner in India.

2006 Garib Rath ‘Chariots of the Poor’, a more affordable version of the AC-3 Tier long distance train, started operation.

2008 In July 2008, UNESCO recognized Kalka – Shimla Railway as a World Heritage Site, which was built in the 19th century.

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The impressive growth and the dramatic turnaround of the Indian Railways has caught the attention of both management experts and global business schools like Harvard and Wharton. Growing at a rate of 12 per cent, Indian Railways has drawn the attention of developed countries like USA, which is now seeking management advice from it. Riding high on its aggressive marketing policy, it had cash surplus before dividend and net revenue estimated at US$ 6.17 billion and US$ 4.53 billion respectively, placing it in a much better position than many of the Fortune 500 companies. Boosted by the booming economy and trade, Indian railways has been recording impressive growth rates-both on the physical and financial front. In fact in the last four years, Indian railways has generated a cumulative cash surplus before dividend of US$ 16.94 billion. Also, for the first time in independent Indian history, the return on capital invested in railways is estimated to reach a record 21 per cent. Simultaneously, the operating ratio of railways has improved from 83.72 per cent in 2005-06 to 78.68 per cent in 2006-07 and further to an estimated 76.3 per cent in 2007-08, making it a member of select club of railways in the world, having an operating ratio of less than 80 per cent.

Review of performance: 2008-09

• Freight loading at 833 million tonnes (MT) grew @ 5% on previous year.

• Traffic receipts also increased by 11.4% to reach Rs 79,862 cr.

• Cash surplus before dividend Rs 17,400 cr after disbursing Rs 13,600 cr towards implementation of 6th Central Pay Commission.

• Railways paid full dividend liability of Rs 4,717 cr to Government.

• Investible surplus of Rs 12,681 cr generated.

• Annual Plan expenditure was Rs 36,336 cr. (Source: Railway Budget 2009-2010)

Some Highlights of Budget 2009-2010

• Plan outlay of US$ 8.34 billion proposed for 2009-10

• Passenger amenities get high priority, to get US$ 225.63 million

• Freight loading at 833 million tonnes (MT) grew at 5 per cent over the previous year

• Traffic receipts during 2008-09 increased by 11.4 per cent to touch US$ 16.34 billion

• Railways paid full dividend liability of US$ 965.14 million to Government

• Investible surplus of US$ 2.6 billion generated

• “Inclusive growth” and expansion of rail network to reach development to every corner of the country is core to developmental approach.

• Economically unviable projects need to be viewed with social perspective being economic necessity for backward areas and under privileged.

• Expert committee to advise on innovative financing and implementation of such projects.

• Priority will be given to effect perceptible improvement in Passenger Amenities, Cleanliness, Quality of Railway catering, Safety and Security, and Punctuality with focus on strict monitoring.

• Extensive availability of Janata Khana, national and regional cuisines.

• 50 stations to be developed as world class stations.

• 375 stations to be upgraded as ‘Adarsh Stations’ with basic facilities including drinking water, adequate toilets, ladies dormitories etc.

• Multi-functional complexes to be constructed at 50 railway stations serving centres of pilgrimage, tourist and industry. To have shopping facilities, food stalls, budget hotels etc.

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• ‘Onboard house keeping scheme’ to cover 200 additional pairs of trains; ‘improved linen management’ with modern mechanized automated laundries.

• Expanding facilities like ramps, special signage, lifts, escalators, special coaches for physically challenged and aged persons.

• Onboard availability of doctors in long-distance trains being considered; ambulance services to be provided in seven cities to start with.

• On-board infotainment services to be provided on important long-distance intercity trains.

• Toilet facilities to be introduced in DEMU/MEMU trains with journey time more than 2 hours.

• 1000 new PRS locations to be opened; UTS services to be expanded from 5000 to 8000 locations.

• Automated ticket vending machines to be installed at 200 large and medium sized stations.

• Taking ticketing to ‘Maa Mati Manush’ – grassroot, through issue of computerized tickets at Post offices and ‘Mushkil Aasaan’ mobile ticketing service vans.

• Air-conditioned double decker coaches for inter-city travel to be introduced.

• Timely track renewal, modernization of signals, use of digital ultrasonic flaw detectors etc.

• Integrated Security Scheme to be introduced at 140 vulnerable and sensitive railway stations.

• Women RPF squads for security of women passengers.

• 6,560 staff quarters to be constructed in 2009-10.

• Indoor stadia to be developed in major railway divisions and zones.

• Increased contribution of Rs 350 per employee to Staff Benefit Fund to continue for a year, with Rs 100 per employee for women empowerment, vocational training of physically and mentally challenged wards especially girl child, and higher education for girls.

• Scholarships for higher education of girl child of group D staff.

• Proposal to open 7 nursing colleges on railway land at Delhi, Kolkata, Mumbai (Kalyan), Chennai, Secunderabad, Lucknow and Jabalpur on PPP model to facilitate the wards of railway employees in finding vocational avenues.

• Burn Units at major Railway hospitals.

• Metro Railway Hospital to be upgraded to 75 beds.

• Medical colleges planned to be attached to existing railway hospitals at 18 locations through PPP mode.

• Dormitories for railway families accompanying patients to be provided at 16 hospitals having 150 beds and above.

• Policy on Railway Recruitment Boards to be reviewed.

• Special recruitment drive for filling vacancies of Scheduled Castes and Scheduled Tribes and Physically Handicapped quota.

• Premium service for container movement with assured transit time being considered.

• Private ownership of special purpose rolling stock for commodities and private operation of freight terminals will be encouraged.

• Mega logistic hubs being planned alongside Eastern and Western Dedicated Freight Corridors.

• Kisan-Vision project – Running special trains from production clusters to consumer centers for perishable products like fruits and vegetables to reduce wastage and also for village handicraft, cottage industry & textile products to increase outreach and access to new markets for rural produce. Temperature controlled cargo centres to be encouraged.

• Premium Parcel Services named Faster Parcel Services on pilot basis on three routes to run with guaranteed transit time from dedicated terminals.

• Dedicated Freight corridors declared ‘Diamond Rail Corridors’.

• Foundation being laid for development of Eastern Industrial Corridor alongside the Eastern Freight Corridor.

• Setting up of a new factory at Kanchrapara-Halisahar Railway Complex with annual capacity of 500 EMU/MEMU and Metro coaches in Joint Venture/Public-Private Partnership mode.

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• Proposal to initiate action for setting up 1000 MW power plant with Ministry of Power, at Adra, in under developed tribal area.

• State of the art training facilities proposed at Dankuni for young artisans and supervisors, thereby contributing to national talent pool.

Some Updates and Estimates for 2009-2010

• Freight loading targeted at 882 MT – an increment of 49 MT; number of passengers likely to grow by around 6%.

• Gross Traffic Receipts (GTR) estimated at Rs.88,419 cr i.e. Rs.8,557 cr more than 2008-09.

• Ordinary Working Expenses budgeted at Rs.62,900 cr to cover the full year impact of VI CPC and the payment of 60% arrears due in 2009-10.

• The dividend payable to General Revenues kept at Rs 5,479 cr.

• Budgeted Operating Ratio 92.5%.

Annual Plan 2009-10

• Plan outlay is Rs 40,745 cr. Increase of Rs 2,840 cr on Interim Budget.

• New lines outlay - Rs. 2,921 cr ; increase of 166% on interim budget

• Gauge conversion - Rs 1,750 cr. – increase of 24% on interim budget

• Passenger amenities - Rs 1,102 cr - 119% increase on interim budget excluding PPP provision, which is unlikely to materialize

• Staff Quarters - Rs 335 cr - increase of 49% on interim budget

• Staff Amenities - Rs 424 cr- increase of 79% on interim budget

• Acquisition of 18,000 wagons in 2009-10 against 11,000 in 2008-09.

• Additional budgetary support of Rs. 1,949 cr. sought for 11 national projects.

• Feasibility study for energy efficient rail based system to provide connectivity to suburban system in Kolkata, Mumbai and Chennai.

• Proposals for better integration of passengers’ movement in Kolkata suburban area.

• Quazigund-Anantnag New Line to be completed by August, ’09.

• Creation of Northeast Rail Development Fund under consideration for timely completion of national projects in N.E. Region.

• New proposals for better rail connectivity proposed to be processed which include 53 for new lines, 3 for gauge conversion works and 12 for doubling.

Freight and Passenger Traffic

The booming passenger and freight traffic has helped the Indian Railways in sustaining its growth momentum in 2008–09. During the first two months of 2008–09, the total earnings of the Railways increased by 19.85 per cent. Overall earnings of the Indian Railways on an originating basis during April–May 2008 totalled to US$ 3.11 billion, against US$ 2.59 billion in the same period last year. During April-July 2008, Railways freight revenues went up by 21.30 per cent. Revenues from freight traffic added up to US$ 3.98 billion during April-July 2008, compared to US$ 3.28 billion during the corresponding period last year. Railways carried 270.73 million tonnes of freight, which was an increase of 9.43 per cent over the 247.39 million tonnes during the corresponding period last year. Goods earnings accounted for the largest chunk of the overall earnings, with a growth rate of 23.54 per cent, totalling US$ 2.12 billion in earnings, against US$ 1.72 billion for the same period last year.

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Concurrently, an increase in passenger traffic has led to overall passenger earnings of the Indian Railways going up by 12.28 per cent to US$ 869 million. Earnings from other coaches and total sundry earnings have gone up to US$ 83.23 million and US$ 29.61 million respectively. With such buoyancy in its overall performance, Railways has set a target of US$ 6.54 billion in cash surplus and 875 million tonnes (MT) of freight loadings for the current fiscal (2008–09). Several measures are being taken to improve the proportion of freight traffic moving on Railways.

• Besides improving the loading of coal, iron ore, cement, fertilizers and food grains, Railways are seeking to increase their share in new traffic streams like automobiles, fly ash etc.

• Permission to access private sidings will be given to containers which will help in attracting piecemeal traffic presently not being carried by Railways.

• A premium service for container movement with assured transit time is being considered for time sensitive cargo.

• Private ownership of special purpose rolling stock for commodities and private operation of freight terminals will be encouraged.

• A new policy would be unveiled to allow construction and operation of private freight terminals and multi-modal logistic parks.

• Railways are also in the process of bringing together state governments and major logistics players to set up logistics parks co-habited by multiple players through participative funding.

• Mega logistics hubs are being planned alongside the proposed Eastern and Western Dedicated Freight Corridors.

Infrastructural Expansion The Indian Railways has lined up massive plans for the upgradation and expansion of its infrastructure, for which it has decided to invite Public Private Partnership (PPP) in the non - core sector for setting up of logistic parks, warehouses, budget hotels, wagon investment schemes, wagon leasing schemes, along with the development of more than 7000 agricultural outlets throughout the country. The Railways minister has announced plans to invest US$ 42.22 billion for the modernization, capacity increase, and completion of new projects during the 11th Five Year Plan. Southern Railway is planning an investment of around US$ 137.44 million for port connectivity projects at Chennai, Tuticorin, Mangalore, Ennore, and Cochin over the next 10 years. The Railways plans to attract about US$ 24.63 billion in the next five years through public private partnerships, so as to complement its efforts to modernize, upgrade, and expand its infrastructure. In 2008-09 alone, Railways plans to attract US$ 6.15 billion of private investment. The Railways also plans to open the marketing, operation, and maintenance of the luxury train segment to private players to take advantage of the demand for such trains. Further, Railways is planning to start new projects like construction of East-West, East-South, North-South and South-South freight corridors, construction of high speed passenger corridors in the Northern, Western, Southern and Eastern regions of the country among others. A train wheel factory has been set up at Bela, Bihar. The Bela factory will produce one lakh wheels annually. The government also plans to set-up: A new wheel factory at Chapra A diesel locomotive factory at Marora An electric locomotive factory at Madhepura, and

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A coach factory at Rae Bareli (at a combined cost of US$ 974.18 million) making India ‘a manufacturing hub for southern Asia and Africa’ in railway equipment. Two dedicated freight corridors - the eastern corridor connecting Ludhiana with Kolkata and the western corridor connecting Mumbai with New Delhi - are to be constructed at a combined cost of US$ 7.15 billion. Kolkata will be getting an underwater rail connection with the extension of the Kolkata metro to its neighbouring city Howrah, through a tunnel under the Hooghly river. The project is estimated to cost US$ 986.4 million and will connect Howrah and the information technology suburb of Salt Lake. Additionally, 26 major Railway stations across India will be developed on the lines of world class stations. Foreign Investments To add further momentum to the high-speed passenger corridor project, the railway ministry has signed a memorandum of understanding (MoU) with its French counterpart, SNCF International. Indian Railways has signed similar agreements with the Railways of Austria, Germany, Italy, Russia, South Africa, and China for technical help and cooperation. With huge investment projects being thrown open for private sector, an increasing number of global players have evinced interest in taking part in this emerging segment.

• Missouri-based American Railcar Industries (ARI) has entered into a strategic pact with auto component major Amtek in a 50:50 joint venture for manufacturing railcars.

• Bombardier Transportation will set up a greenfield plant to make rail cars in Vadodara.

• GE Equipment Services (GEES) has entered India by picking up a 15 per cent equity stake in Titagarh Wagons.

• Amsted Rail, the world’s largest producer of rail cast wheels, will set up a cast wheel manufacturing unit.

• A consortium of RITES Ltd (India) - PCI (Japan) - PBI (USA) - SYSTRA (France) has bagged the contract to provide consultancy services to Bangalore Metro Rail Corporation.

• Siemens Transportation System has tied with public sector enterprise RITES for railway wagon production. Further, many players like Mitsubishi Corporation, Siemens, Alstom, Itochu, Toshiba, Kawasaki, Terry Farrell and Partners, Von Gerkan, Marg und Partner, Aedas Ltd, Hellmuth, Obata and Kassabaum Inc and Arep Ville France among others have all shown keen interest to participate in various segments of Railways. Innovative Initiatives The Railways is in a dynamic phase of growth with new initiatives planned to increase its revenue and optimally utilise its resources.

• For the training of railway managers to meet future challenges, Indian Railways is planning to set an international management institute in New Delhi. The International Railway Strategic Management Institute will come up in collaboration with the International Union of Railways (UIC), and US$ 4.64 million has already been sanctioned for it.

• The Railways has decided to increase its income through advertising on all Rajdhanis, with the cost of advertising being around US$ 1.26 million per train.

• Development of agri-retail hubs, cold storage houses, multi-purpose warehouses on surplus land with the Railways.

• Development of 100 budget hotels with private participation in the vicinity of railway stations.

• Introducing new generation trains that would be fuel-efficient, recyclable, and low-emission to generate certified emission reduction credits.

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• Introducing marketing rights for advertising on railway tickets and reservation charts.

• Installation of Wi-Fi for providing wireless access at 500 stations.

• Establishment of integrated logistic parks on unused lands.

• Along with these, the Railways has adopted many new measures like Dynamic Pricing Policy, Tariff Rationalization, Non-Peak Season Incremental Freight Discount Scheme, Empty flow Direction Freight Discount Scheme, Loyalty Discount Scheme and Long-term Freight Discount Scheme among others to boost its capacity utilisation levels.

• Passengers can now reserve tickets through the internet from their homes. Apart from this, the facility to reserve tickets is available at ATMs, petrol pumps and post offices.

• Passengers can get information about train services from any corner of the country. This has been made possible through the ‘139 Train Enquiry Service’, which is available 24 hours a day in 11 different cities.

• The Annual Plan for 2009-10 envisages investment of US$ 7.6 billion.

• Railways is also expected to invest US$ 45.9 billion in the 11th Plan, triple the amount envisaged in the 10th Plan.

On The Right Track With a growth rate of 12 per cent, Indian Railways is the world’s second busiest railway after China in terms of passenger-km and the third busiest overall. With further growth of the economy, the estimated traffic level by the end of 2011-12 is expected to be about 8.4 billion passengers and 1.1 billion tonnes of freight per year. • Against the in-house manufacturing capacity of 2500 passenger cars and 350 locomotives per annum, 4500

passenger cars and 700 locomotives are required to meet the future traffic needs. The two new rail routes have been sanctioned by the Cabinet. These are the Western corridor between Dadri in Uttar Pradesh and the Jawaharlal Nehru Port Trust in Navi Mumbai, via Ahmedabad, Tughlakabad (Delhi) etc. and an Eastern corridor connecting Dankuni (near Kolkata) to Ludhiana in Punjab for which construction will commence from 2010-11. Further, the two projects, being undertaken by the PSU Dedicated Freight Corridor Corporation of India Ltd, are expected to be commissioned by 2015 or 2016.

• The Ministry of Railways also has sanctioned special units which have been floated to construct additional railway tracks connecting the four cities, Delhi, Mumbai, Kolkata and Chennai, for transmission of goods carriages.

• A total investment of US$ 5.6 billion has been planned for the two corridors, US$ 3.3 billion for the Western and US$ 2.3 billion for the Eastern, respectively.

• Three new electric loco, diesel loco and coach factories to be set up by the Railways as wholly owned departmental production unit, will cost the Ministry about US$ 1.02 billion.

• Indian Railways proposes to import 50 electric and 50 diesel locomotives over the next three years. • The Indian Railways has worked out new projects under the public-private-partnership scheme. Infrastructure

major, Punj Lloyd Group has secured three contracts worth US$ 61.4 million from the Bangalore Metro Rail Corporation for the construction of eight stations. The group is working on several projects for Delhi Metro currently.

• Reliance Infrastructure, an ADAG company, has finalised contracts for the metro rail link between Delhi international airport and city centre. The Delhi Airport Metro Express Pvt Ltd (DAMEPL)—a special purpose vehicle in which Reliance Infrastructure holds major stake and Spanish firm CAF owns the rest—has won the 30-year tie-up to design, build, finance, operate and maintain the 22.7 km rail link.

• Indian Railways plans to utilise NXP Semiconductors’ technology solutions to improve the overall passenger experience and drive operational efficiencies. NXP’s microcontroller-based chip technology ‘MIFARE DESFire’ has been selected by the Centre for Railway Information Systems (CRIS) to power contact-less smart cards for automatic fare collection using Automatic Ticket Vending Machines (ATVMs) across various cities.

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3.2 ROADWAYS India has the world’s second largest road network, aggregating over 3.314 million kilometres. The share of road transport in the GDP is over 4.6 per cent in 2007 (as against 3.8 per cent in 2000), accounting for over two-thirds of the total transport contribution to the GDP. The country’s road network consists of National Highways, State Highways, Major District Roads, Other District Roads, and Village Roads. The road network comprises 70,548 kilometres (kms) of National Highways, 128,000 kms of State Highways, 470,000 kms of major district roads and about 2.65 million kms of other District and rural roads. About 60 per cent of freight and 87.4 per cent passenger traffic is carried by the roads. While the national highways account for about 2 per cent of the total road network, they carry 40 per cent of the total goods and passengers. Out of the total length of national highways, 30 per cent (20,849 km) is single lane/intermediate lane, 53 per cent (37,646 km) is 2-lane standard, and the balance of 17 per cent (12,053 km) is 4-lane standard or more. The number of vehicles has been growing at an average pace of around 10 per cent per annum (2001- 2002 to 2005-06). The share of road traffic in total traffic has grown from 13.8 per cent of freight traffic and 15.4 per cent of passenger traffic in 1950-51 to an estimated 60 per cent of freight traffic and 87.4 per cent of passenger traffic by the end of 2005-06.The rapid expansion and strengthening of the road network, therefore, is imperative, to provide for both present and future traffic and for improved accessibility to the hinterland. In addition, road transport needs to be regulated for better energy efficiency, less pollution and enhanced road safety. The vehicle density in India is currently only 12 vehicles per 1000 persons. With increase in vehicular traffic (automobiles grew at the rate of 16.82 per cent in 2006-07), accelerated trade growth, increasing urbanisation, the need to reduce stress on existing highways and to provide connectivity for improved accessibility of hinterland, substantial investment is required to strengthen and expand the road transport network to meet both - present and future - traffic demand. Under former Prime Minister Atal Behari Vajpayee, India launched a massive program of highway upgrades, called the National Highway Development Project (NHDP), in which the main north-south and east-west connecting corridors and highways connecting the four metropolitan cities have been fully paved and widened into 4-lane highways. Some of the Busy National Highway sectors in India have been converted to 4 or 6 lane expressways – for example, Delhi-Agra, Delhi-Jaipur, Ahmedabad-Vadodara, Mumbai-Pune, Mumbai-Surat, Bangalore-Mysore, Bangalore-Chennai, Chennai-Tada, Hyderabad-Vijayawada and Guntur-Vijayawada. Phase V of the National Highway Development Project is to convert all 6000 km of the Golden Quadrilateral Highways to 6-lane highways/expressways by 2012.

• Ahmedabad-Vadodara Expressway was India’s first expressway. It was originally planned during the 1970s, but was delayed for decades due to land-usage and political issues. These issues were resolved in the 1990s, and the expressway opened in 2001. The expressway cuts the journey between the two cities to less than 1 hour. This expressway was India’s first 4-lane and dual carriageway expressway project and includes minor bridges and canal crossings, interchanges at Nadiad and Anand, cross-drainage works, rest areas, and related structures, for a length of 92.85 km.

• Delhi-Gurgaon Expressway - This expressway opened completely for the public on Jan 23, 2008, and is a part of Golden Quadrilateral highway project. This expressway is expected to reduce travel time between Gurgaon and Delhi from upwards of 60 minutes to approximately 20 minutes. Some special features of this highway are SOS telephones every 1.5 km, CCTV surveillance, and a 32-lane toll plaza at the Delhi-Haryana border. The highway will be categorized into three parts: the VIP zone (up to the IGI Airport), the Urban section (up to Gurgaon), and Trucker’s Paradise (after Gurgaon).

• Ganga Expressway - This project was announced in 2007 by Uttar Pradesh Chief Minister Mayawati. At 1000 km, it will be India’s longest expressway. It will link Noida, on Uttar Pradesh’s western border with

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Delhi to Ballia, on Uttar Pradesh’s eastern border with Bihar. The expressway will run along the left bank of the Ganga river, in contrast to the Grand Trunk Road which is on the right bank. The expected cost is Rs 40,000 crore ($10 billion). This expressway should reduce the travel time between Delhi and Varanasi to 8 hours. The project is expected to be completed in 2011.

• Mumbai-Pune Expressway - The Mumbai-Pune Expressway is India’s first 6-lane, concrete, high-speed, tolled, access-controlled expressway. It connects Mumbai, the commercial capital of India, to the neighboring educational and information technology-oriented city of Pune. With its smoothly paved concrete construction, this highway is unlike most other roads in India, where traffic is chaotic and aggressive driving is the norm. This high speed motorway largely follows established traffic patterns and offers a scenic drive between Mumbai and Pune, while cutting the travel time between these two commercially important Western Indian cities from 4 - 5 hours on the old NH4, to 2 - 3 hours.

o Highway features � 6-lane concrete highway with 7 m wide divider. An extra lane provided on each side as a

hard shoulder. � Separate tunnels for traffic in each direction. � Complete fencing to avoid humans/animals crossing the expressway. � No two-wheelers, three-wheelers, or tractor vehicles allowed. � Provision of petrol pumps, motels, workshops, toilets, emergency phones, first aid,

breakdown vans, etc. � Proposed planting of 80,000 trees along the Expressway.

• Shimla-Chandigarh Expressway - The expansion to 4 lanes of Shimla-Chandigarh National Highway 22 (NH22) will eventually result in the formation of the Shimla-Chandigarh Expressway.

• Noida-Greater Noida Expressway, also known as Taj Expressway, connects Noida, an industrial suburb area to Greater Noida, a new suburb. This expressway is undergoing expansion to Taj Economic Zone, International Airport, and Aviation Hub proposed to be constructed along the Taj Expressway. The objectives of the proposed expressway are as follows:

o Highway features � To provide a fast moving corridor to minimize the travel time � To connect the main town ships / commercial centers on the Eastern site of river Yamuna � To ensure development of adjoining areas � To relieve NH-2, which is already congested and runs through the heart of cities like

Faridabad, Ballabhgarh, and Palwal

• Delhi-Noida Express Highway is an eight-lane access controlled tolled expressway which connects Delhi to Noida, an industrial suburb area. It was built and is maintained by the Noida Toll Bridge Company Limited (NTBCL). NTBCL was developed under a Build-Own-Operate-Transfer (BOOP) model. The project included the construction of a flyover at Ashram Chowk. The other major part of the project was the construction of a 552.5 meter bridge over the Yamuna river. This bridge was estimated to cost Rs. 408 Crore.

Major Inroads The Eleventh Five Year Plan places high priority to the expeditious completion of works approved under the different phases of the National Highways Development Programme (NHDP). For the roads and bridges sector, the Eleventh Five Year Plan envisages a total investment of approximately US$ 78.5 billion over the five-year period starting from 2007-08. Of this, the shares of the Centre, the States, and the private sector are expected to be 34.2, 31.8, and 34 per cent, respectively. During 2007-08, an amount of US$ 1.86 billion has been provided for the National Highways and for State roads out of the same. Of this amount, US$ 1.5 billion is for National Highways and US$ 0.36 billion for State roads. An amount of US$ 0.04 billion has also been allocated during 2007-08 for the development of State Roads.

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Private Sector

According to a KPMG report ‘Opportunities in Infrastructure and Resources in India’, investments of the order of US$ 500 billion are expected to take place in the coming years for developing roads and infrastructure. Increased resource requirement along with concern for managerial efficiency and consumer responsiveness has led to major involvement of the private sector via both construction contracts and build-operate-transfer (BOT) based on either toll or annuity basis. According to the Ministry of Road Transport’s annual report (2007-08), so far 82 projects collectively by National Highway Authority of India and Ministry of Shipping, Road Transport, and Highways have been taken up (56 NHAI + 26 MoSRTH) valued about US$ 341.11 billion on BOT basis (Toll-based projects) through public private partnership. Out of this, 34 projects (10 NHAI + 24 MoSRTH) have been completed and 48 projects are under progress. Reliance Energy has three contracts to four-lane 400 km of highway, and is already working on four-laning five National Highway projects in Tamil Nadu, covering 400 km at an estimated cost of over US$ 762.42 million. L&T Inter-state Road Corridor Limited is executing the four-laning of the 76-km highway between Palanpur and Swaroopgunj on the East-West Corridor. The consortium of Maytas Infra Private Limited and Nagarjuna Construction Company Ltd will four-lane the highway from Tindivanam and Pondicherry, at an estimated cost of US$ 70.09 million. Lanco Infratech has the contract to four-lane two highways in Karnataka at an estimated cost of US$ 247.41 million.

• DS Construction will develop the Gwalior-Jhansi section on NH-75, which includes four-laning at a cost of US$ 159.9 million.

• Era Constructions India Limited along with Karam Chand Thapar & Bros Limited will construct a section of the Delhi-Haryana Border to Rohtak. It is also involved in the construction of a four-lane Gwalior by-pass at a cost of US$ 73.8 million.

• Jaiprakash Associates Ltd (JAL) is implementing the Taj Expressway project, which envisages a six-laned 165 km stretch connecting Greater Noida to Agra, at a cost of US$ 554.93 million.

• The Hyderabad Urban Development Authority (Huda) is investing about US$ 1.40 billion for an eight-lane access-controlled expressway.

Madhucon Projects has BOT projects with four toll-based road projects. The company has so far invested close to US$ 0.06 billion in these projects in the form of equity and has started construction work in each of the projects. The company has significantly completed the construction work on its first project i.e. Bharatpur-Mahua in Rajasthan and expects to complete the project by October 2008, two months ahead of schedule. The other projects apart from Bharatpur to Mahua - 70 per cent complete are Karur to Dindigul (TamilNadu) - 33 per cent, Madurai to Tuticorin (TamilNadu) - 24 per cent, and Tanjavur to Trichy (TamilNadu) - 17 per cent complete. The work is going on full steam ahead in other projects also. International Participation

Given the attractive investment opportunities emerging in the Indian roads segment, contractors and supervision consultants across the world are coming to the country. Already, 86 contracting and consulting firms from 27 countries are participating in various projects of the NHDP. American construction major Star Universal Resource Company has already expressed interest in building an expressway between Sikkim and West Bengal. The proposed road, with ten tunnels and as many bridges, will cost US$ 361.93 million. Companies such as Turkey’s Limak, Thailand’s Italthai, Korea’s Baelim, Russia’s Dyckerhoff, Germany’s Widmann AG, Malaysia’s IJM Construction, SDN and Road Builders and Japan’s Kajima and Taisei are undertaking projects floated by the National Highway Authority of India (NHAI) and other state governments.

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And with the Government deciding to increase the size and scale of contracts - average length of a highway contract has been fixed at 100-plus km - this segment is likely to attract new global highway construction companies and toll-road operators, even as the current ones increase their scale of operations.

Achievement With large investments pouring in, substantial progress has been made in the road development sector till February 2008. (Source: Road Transport Annual Report 2008-09) Government Initiatives

• The National Highways Fee (Determination of Rates and Collection) Rules, 2008 were notified on 5.12.2008. • Manual of Standards and Specifications for four and six laning is being reviewed and finalized with a view to

optimise the technical benchmarks and standards so as to rationalise the Project cost which will also increase the viability of Projects.

• MCA for BOT (Annuity) approved by IMG and CoS is being finalized keeping in view the directions of the Cabinet Committee on Economic Affairs (CCEA) on alternative modes of delivery of National Highways in consultation with the Ministry of Finance and the Planning Commission.

• Consultancy Services for formulation of a Master Plan for the National Expressway Network in India has been awarded in December, 2008. The total sanctioned cost of the Consultancy Services is Rs.59.66 lakh. The study is targeted for completion by July, 2009. The objective of the Consultancy Services is to prepare Master Plan in order to establish a National Expressway Network identifying therein the expressway corridors for the horizon year 2022 i.e. end of 13th Five Year Plan giving prioritised phasing for completion by the year 2012, 2017 and 2022.

• The Government approved NHDP Phase–IVA in July, 2008 for upgradation/strengthening of 5,000 km of single/intermediate/two lane National Highways to two lane with paved shoulders for a total estimated cost of Rs.6950 crore on BoT (Toll) and BoT (Annuity) basis. Out of this, at least 4,000 km is to be implemented on BOT(Toll) mode. NHDPPhase- IVA is targeted for completion by December, 2013. An NHDP Phase –IVA Cell has been constituted in the Ministry for this purpose and taking up development of other selected stretches for development to two lane with paved shoulders.

• At present, out of the total length of 70,548 km of National Highways in the country, about 20,849 km stretches of National Highways are below 2-lane standards. Emphasis is to be given for widening of these

Phases Total Length (km)

Length (km) completed

Length completed during 01-04-2008 to 31-03-2009

Likely date of completion

1 – Golden Quadrilateral, East/West-North/South corridors, Port connectivity, and others

7498 7188 132 -

2 – 4/6 laning North/South-East/West corridors and others

6647 2828 1534 Dec – 2009

3 – Upgradation, 4/6 laning 12109 787 376 Dec – 2013

4 – 2 laning with paved shoulders 20000 --- - Dec – 2015 (as per financing plan)

5 – 6 laning of GQ and high density corridors

6500 106 106 Dec – 2012

6 – Expressways 1000 Nil Nil Dec – 2015 7 – Ring Roads, Bypasses, and flyovers and other structures

700 Nil Nil Dec – 2014

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stretches of National Highways to a minimum of 2-lane standards within the 11th and the 12th Five Year Plan period.

• Attention is also to be accorded to the construction of missing links and missing bridges on National Highways, construction of Road Over Bridges (ROBs) / Road Under Bridges (RUBs) in place of existing level crossings, rehabilitation / reconstruction / widening of weak / dilapidated and narrow bridges, etc. on National Highways.

• Development / upgradation of National Highway linkages, for providing connectivity to the Integrated Check Posts (ICPs) proposed to be developed along the International Borders with Pakistan, Nepal, Bangladesh and Myanmar by the Department of Border Management (Ministry of Home Affairs), are being taken up in a phased manner as per the priority of the Department of Border Management.

Road Ahead According to a consultation paper by the Planning Commission, given the robust growth of the Indian economy, investment in the roads sector during the Eleventh Plan is projected at US$ 93.11 billion. While approximately US$ 46.05 billion is projected to be invested in national highways, US$ 34.65 billion will be spent for state roads, US$ 10.97 billion in rural roads, and US$ 1.42 billion in roads in the North-East. Significantly, the private sector is projected to invest US$ 33.61 billion, accounting for 36.1 per cent of the total investment. In a recent development, the government on August 11, 2008, approved 10 road projects to be built with the help of private firms at a cost of US$ 2.5 billion (Rs. 105.07 billion), according to the finance ministry. The projects, spread over eight states, are part of India’s plan to significantly improve its infrastructure at a cost of US$ 500 billion over the next five years till the end of 2012. The projects are located in Maharashtra, Tamil Nadu, Bihar, Kerala, Goa, Andhra Pradesh, Uttar Pradesh and Uttarakhand. The projects include four-laning of:

• Pune-Sholapur section (Maharashtra)

• Coimbatore-Mettupalayam section

• Khagaria-Bhaktiarpur section (Bihar)

• Kuttipuram-Edapally (Kerala)

• Patna-Buxar section (Bihar)

• Goa/Karnataka border-Panaji (Goa)

• MP/Maharashtra border-Nagpur section of NH7 including Kamptee-Kahnan and Nagpur bypass in Maharashtra

• Chennai Port gate No. 10 to Maduravoyal (NH4) in Tamil Nadu

• Armur-Adloor Yellareddy section of NH7 in Andhra Pradesh, and

• Muzzafarnagar-Nepali farm section of NH 58 in Uttar Pradesh and Uttarakhand from Nepali to ISBT Dehradun (UP and Uttarakhand).

Punjab infrastructure development board (PIDB) has approved US$ 1.98 billion expressway between Pathankot town in north Punjab and the shrine town of Ajmer in Rajasthan, which will reduce the distance between both places by 200 km from the present network of highways. The 340-km project will be executed by the Anil Dhirubhai Ambani group (ADAG), according to the PIDB. Other expressways to be constructed include one from the upcoming international airport at Mohali, adjoining Chandigarh, to Phagwara town for US$ 0.5 billion, an expressway around Mohali for US$ 0.53 billion and a ring road around the Sikh holy city of Amritsar for US$ 0.573 billion. Keeping the 2010 Commonwealth Games in mind, the Municipal Corporation of Delhi (MCD) will take up upgrading and strengthening of major city roads at an investment of US$ 0.002 billion. During the current

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financial year, the civic body has created a special Escrow account for urban and rural roads and has made budget provision of US$ 0.02 billion and US$ 0.006 billion respectively, according to the MCD Standing Committee Chairman Vijender Gupta. Government approval for a sum of US$ 0.04 billion for road improvement and repair works under Central Road Fund Scheme has been sanctioned by the Minister of Shipping, Road Transport and Highways, T R Baalu, to be spent on 75 different stretches of major district roads and state highways in various districts in the state of Andhra Pradesh. With humungous projects getting approval, increase in number of roads in India can be claimed to be on par with increase in number of vehicles leading to improved infrastructure for the economy. 3.3 CIVIL AVIATION For decades, air travel was for the elitist and urban. After that, low-cost, no-frills airlines came along to bring the middle-class into the fold; passenger traffic has almost trebled in just six years to over 116 million in 2007-08, making India the ninth largest aviation market in the world from 12th in 2006. The scheduled domestic air services are now available from 82 airports as against 75 in 2006. Now air travel promises to become available beyond the urban boundaries with the Airports Authority of India seeking consultants to study how airstrips currently not in civilian use can be either revived or mainstreamed. There are 454 such airstrips all over the country, including those used by the Air Force, and the expectation is that even if some of them can be used again for civilian traffic, the new official thrust on encouraging regional air links will deliver results faster. History of Civil Aviation Industry in India: 1911 - The first commercial flight in India was made on February 18, 1911, when a French pilot Monseigneur Piguet flew airmails from Allahabad to Naini, covering a distance of about 10 km. 1912 - The history of civil aviation in India began in December 1912. This was with the opening of the first domestic air route between Karachi and Delhi by the Indian state air services in collaboration with the imperial Airways, UK, though it was a mere extension of London-Karachi flight of the latter airline. 1915 - The first Indian airline, Tata Sons Ltd., started a regular airmail service between Karachi and Madras without any patronage from the government. 1929 – The first scheduled passenger flights in India were operated by KLM and Imperial Airways of UK. 1948 – June 1948 marked the commencement of the operation of international air services by Air India under the leadership of legendary late Mr. J.R.D. Tata. 1953 – Government took over the domestic civil aviation Industry by nationalizing Indian Airlines (IA). All airlines operating in the country were merged into either Indian Airlines or Air India and by virtue of the Air Corporations Act, 1953, this monopoly was perpetuated for the next forty years. The Directorate General of Civil Aviation controlled every aspect of flying including granting flying licenses, pilots, certifying aircrafts for flight and issuing all rules and procedures governing Indian airports and airspace. Finally, the Airports Authority of India was entrusted with the responsibility of managing all national and international airports and administering every aspect of air transport operation through the Air traffic Control. 1986 – Domestic liberalization took off with the launch of schedules services by new start-up carriers from 1992. 1991 – Indian government introduced open sky policy for domestic operation.

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1994 – November 1994 saw the beginning of open sky policy for international operations. 1995 - Airport Authority of India was set up on April 1, 1995 by amalgamating the international Airport Authority of India and the National Airport Authority of India, the Airport Authority of India was to handle all matters relating to infrastructure for civil air traffic and transport at the international and the domestic airports and enclaves in the country. Growth of Civil Aviation Industry In the recent years, there has been an unprecedented growth in the Indian Civil Aviation Industry and domestic passenger traffic. However, a close examination of the present status and structure of the Industry reveals that it is still in its nascent stage of development and has a long way to go in order to match the developments in the international aviation industry. The industry, therefore, offers ready, significant and enormous opportunities to all the players and participants, with interest in this growing sector. With the liberalization of the Indian aviation sector, aviation industry in India has undergone a rapid transformation. From being primarily a government-owned industry, the Indian aviation industry is now dominated by privately owned full-service airlines and low-cost carriers. With a growth rate of 18 per cent per annum, the Indian aviation industry is one of the fastest growing aviation industries in the world. The government's open sky policy has led to many overseas players entering the market and the industry has been growing both in terms of players and number of aircrafts. Today, private airlines account for around 75 per cent share of the domestic aviation market. Earlier, air travel was a privilege only a few could afford, but today, air travel has become much cheaper and can be afforded by a large number of people. There has been a phenomenal growth in the Indian aviation sector in 2007-08. As per the Ministry of Civil Aviation, the airline business is growing at 27 per cent per annum in India. During 2007, the domestic airline passenger traffic has shown a growth of 32.51 per cent. Further, the scheduled domestic air services are now available from 82 airports as against 75 in 2006. 2007 was arguably the best growth period for India’s civil aviation sector. Passengers carried by domestic airlines increased by 27.9 per cent (to 64.9 million passengers) in the first three quarters of 2007-08, against 50.74 million in the same period in 2006. Overall aircraft movements also increased by 23.3 per cent during April-December 2007-08, as compared to the same period in 2006-07. International movement was up by 14.8 per cent and the domestic, by 25.4 per cent. Simultaneously, overall passenger traffic increased by 25 per cent, while the freight traffic was up by 11 per cent. The Indian Civil Aviation market grew at a compound annual growth rate (CAGR) of 18 per cent, and was worth US$ 5.6 billion in 2008. The Centre for Asia Pacific Aviation (CAPA) forecasted that domestic traffic will increase by 25 per cent to 30 per cent till 2010 and international traffic growth by 15 per cent, taking the total market to more than 100 million passengers by 2010. By 2020, Indian airports are expected to handle more than 100 million passengers including 60 million domestic passengers and around 3.4 million tonnes of cargo per annum. Moreover, significant measures to propel growth in the civil aviation sector are on the anvil. The government plans to invest US$ 9 billion to modernise existing airports by 2010. The government is also planning to develop around 300 unused airstrips.

Market Size Domestic and international traffic is up 45 per cent and 15.1 per cent, respectively. Between May 2007 and May 2008, airlines have carried 25.5 million domestic and 22.4 million international passengers. The vibrancy in the Indian aviation market has been overwhelming: over 135 aircraft have been added in the past two years alone. And by 2010, India’s fleet strength will stand at 500-550. Centre for Asia Pacific Aviation

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(CAPA) estimates domestic traffic to grow 25-30 per cent annually and international traffic 15 per cent until 2010, taking the overall market to more than 100 million passengers by the end of the decade. According to a study by International Air Transport Association (IATA), India will be a driving force behind the world’s civil aviation business that is globally expected to grow from US$ 5.1 billion to US$ 5.6 billion in 2008. Its civil aviation passenger growth, at 20 per cent, is among the highest in the world. The sector is slated to cruise far ahead of other Asian giants like China or even strong economies like France and Australia. The number of passengers who will be airborne by 2020 is a whopping 400 million. Air Traffic

Domestic air traffic is likely to more than double and touch 86.1 million passengers by 2010, up from 32.2 million passengers in 2007, states the market research firm PhoCus. According to data compiled by the Airports Authority of India (AAI), 24.62 million people flew on international routes to and from India during April-January 2007-08. This was a growth of 16.2 per cent over the same period last fiscal. The growth of domestic air passengers was at an even faster rate of 26.1 per cent, with 72.60 million people availing aircraft services. Simultaneously, freight traffic on both domestic and international routes increased by a healthy 8.2 per cent and 12.6 per cent, respectively.

Importance of growth in Civil Aviation: An efficient aviation sector is essential to support tourism, an industry with immense employment opportunity. Here, it is noteworthy that investment in tourism industry would generate the largest number of jobs as compared to investment in other sectors. Thus, an investment of Rs.10 lakh creates – 13 jobs in manufacturing, 45 jobs in agriculture, and 89 jobs in tourism. Furthermore, tertiary benefits of tourism are significant as the trickle-down benefits of the travel & tourism industry on the economy go far beyond what is apparent. The Satellite Accounting figures of World Travel & Tourism Council (WTTC) suggest that the $11.33 billion travel & tourism industry in India supported $23.8 billion in related economic activities.

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Airlines in India

Market Share in 2007 and 1st Quarter of 2008 (Source Directorate General of Civil Aviation)

Airlines Market Share Jan - Dec 2007 (in percentage)

Jet Airways , 24.2

Kingfisher, 10.6

Jet Lite, 8.1

Air Deccan, 18.6

Indian Airlines, 19.2

Spice Jet, 8.1

Paramount, 1.5

Go Air, 4.7

Indi Go, 5

Airlines Market Share Jan - Mar 2008 (in percentage)

Jet Airways , 22.7

Kingfisher, 14.5

Jet Lite, 7.1

Air Deccan, 14.6

Indian Airlines, 14.7

Spice Jet, 10.3

Paramount, 1.3

Go Air, 4.4

Indi Go, 10.3

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Quick look at the major airlines

Indian: • State owned domestic airline

• Formerly known as Indian Airlines

• Company re-branded as Indian in Dec 05 to revamp image in preparation for an IPO Air India:

• Set up by J.R.D. Tata as ‘Tata Airlines’ in 1932

• Nationalized in 1953

• National flag carrier

• Profitable in most years since its inception Indian and Air India along with its subsidiaries – Air-India Express, Air India Regional (formerly Alliance Air, and Air India Cargo have been merged together to form the only state owned airline in the country ‘National Aviation Company of Indian Limited’ (NACIL). The merger and registration were completed in August 2007. With the merger, NACIL is the largest airlines in India with over 110 aircrafts connecting 130 international and domestic destinations around the world. Air Sahara: • Established in September 1991 and began on 3 Dec 1993 with two Boeing 737-200 aircrafts as Sahara

Airlines initially services concentrated in northern India.

• Re-branded as Air Sahara on 2 October 2000.

• Became an International carrier in March 2004.

• The Airlines was acquired by Jet Airways and renamed as ‘Jet Lite’ in 2007 Jet Airways: • Incorporated as “Air Taxi” operator on 1 April 1992 and started commercial airline operation in May 1993.

• “Regular” airline offering normal economy and business class seats.

• Over 400 daily flights, 65 Indian destinations.

• Does not own its brand. Brand owned by Jetair Enterprises Ltd., a separate company substantially owned by Naresh Goyal.

• Acquired Air Sahara (renamed currently as ‘Jet Lite’) in April 2007 for $340 million, which is currently operated between a low cost carrier and a full service airline.

Kingfisher Airlines: • Services started in May 05.

• Initially operates only on domestic routes.

• Owned by United Beverages Group under the leadership of Vijay Mallya.

• Pushed for amendment of rule which requires an airline to fly a minimum of five years on domestic routes before it can start flying overseas. Barring such an amendment, first international flights planned to start in 2010.

• Kingfisher Airlines’ main “luxury” component is its in-flight entertainment system, a first among Indian airlines.

• The airline’s in-flight Mobile Phone and Internet Services will be provided by OnAir starting 2008 for long-haul flights.

• Operating 218 flights a day with 38 destinations.

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• Has merged with ‘Air Deccan’, following which Deccan Aviation will be renamed as ‘Kingfisher Airlines’, which will allow Kingfisher to bypass five year wait to fly international destinations. The merger is effective from April 2008.

Air Deccan:

• India’s first low-cost carrier.

• Started air operations in 2003.

• Despite a disastrous maiden flight which caught fire, Deccan continues to grow.

• Due to stock market downturn, Air Deccan’s IPO barely managed to scrape through in 2006.

• Connects 69 destinations.

• Merged with Kingfisher Airlines and flies low cost carrier segment. Spice Jet:

• Low-cost airline (LCC).

• Earlier known as Royal Airways, a reincarnation of Modiluft, which ceased its operation in 1996.

• Began in May 2005.

• Entered with Rs. 99 fares for first 99 days.

• Marketing strategy “Offering low everyday spicy fares”.

• Aim: Compete with Indian Railways AC segment.

• Fleet of 17 Boeing 737-800 (3 on order) with 189 seats and 2 Boeing 737-900ER (8 on order) with 212 seats.

• Voted as the best low cost airline in South and Central Asia by Skytrax in 2007. IndiGo: • Founded in 2005 and commenced operation in August 2006 as a Low Cost Carrier.

• Owned by Interglobe Enterprises.

• Connects 17 destinations.

• Fleet size of 20 Airbus A320232 as of April 2008. Has placed one of the highest order by any domestic carrier of 100 airbus family aircrafts in 2005.

Go Air:

• GoAir – The People’s Airline.

• Established in June 2004.

• LCC promoted by The Wadia Group.

• Relatively small player.

• Initial flights in southern & western India with the first nine A320s.

• Connects 12 Destinations. FDI in Aviation

India’s liberalization of the aviation sector has opened up 28 airports for foreign direct investment (FDI) in areas of operation and maintenance of airports.

• For greenfield airports, FDI up to 100 per cent is permitted through automatic approvals. • For existing airports, FDI up to 74 per cent is permitted through automatic approvals and upto 100 per

cent through special permission (from FIPB).

Airport Infrastructure

• Of the 454 airports and airstrips in India, 16 are designated international airports. Currently, 97 airports are owned and operated by the Airports Authority of India (AAI). India’s Civil Aviation Ministry aims at 500

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operational airports in the next 12 years, as per a report by Centre for Asia Pacific Aviation (CAPA). The government aims to attract private investment in aviation infrastructure.

• Mumbai and Delhi airports have already been privatized and are being upgraded at an estimated investment of US$ 4 billion over 2006-16.

• A greenfield airport is already operational at Bangalore and the one at Hyderabad will be operational soon. These are built by private consortia at a total investment of over US$ 800 million.

• A second greenfield airport being planned at Navi Mumbai is going to be developed using public-private partnership (PPP) mode at an estimated cost of US$ 2.5 billion.

• 35 other city airports are proposed to be upgraded. The cityside development will be undertaken through PPP mode where an investment of US$ 357 million is being considered over the next 3 years.

• Over the next five years, AAI has planned a massive investment of US$ 3.07 billion - 43 per cent of which will be for the three metro airports in Kolkata, Chennai and Trivandrum, and the rest will go into upgrading other non-metro airports and modernising the existing aeronautical facilities.

Aviation Policy Many policies supporting the infrastructure are now in place.

• For greenfield airports, FDI up to 100 per cent is permitted through automatic approvals.

• For existing airports, FDI up to 74 per cent is permitted through automatic approvals and up to 100 per cent through special permission (from FIPB).

• Private developers are allowed to set up captive airstrips and general airports 150 km away from an existing airport.

• 100 per cent tax exemption for airport projects for a period of 10 years.

• 49 per cent FDI is permissible in domestic airlines under the automatic route, but not by foreign airline companies. 100 per cent equity ownership by Non-Resident Indians (NRIs) is permitted.

• 74 per cent FDI is permissible in cargo and non-scheduled airlines.

• The Indian government plans to set up an Airport Economic Regulatory Authority to provide a level playing field to all players.

• The “Open Sky” policy of the government and rapid air traffic growth have resulted in the entry of several new privately owned airlines and increased frequency/flights for international airlines.

Aviation Sector Outlook As per the Investment Commission of India, the aviation sector is likely to boom further in the coming years, attracting huge investment.

• Passenger traffic is projected to grow at a compound annual growth rate (CAGR) of over 15 per cent in the next 5 years.

• The Vision 2020 statement announced by the Ministry of Civil Aviation, envisages creating infrastructure to handle 280 million passengers by 2020.

• Investment opportunities of US$ 110 billion envisaged up to 2020 with US$ 80 billion in new aircraft and US$ 30 billion in development of airport infrastructure.

• Associated areas like maintenance repair and overhaul (MRO) and training offer high investment potential. A report by Ernst & Young says the MRO category in the aviation sector can absorb up to US$ 120 billion worth of investments by 2020.

• Air cargo traffic to grow at over 11.4 per cent p.a. over the next 5 years to exceed 2.8 million tonnes by 2010. Flight Ahead The Indian civil aviation market holds great promise for potential investors. Over the past year, various companies have shown an interest in the Indian aviation industry.

• Passenger traffic is projected to grow at a CAGR of over 15 per cent in the next 5 years.

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• The Vision 2020 statement announced by the Ministry of Civil Aviation, envisages creating infrastructure to handle 280 million passengers by 2020.

• Investment opportunities of US$ 110 billion envisaged up to 2020 with US$ 80 billion in new aircraft and US$ 30 billion in development of airport infrastructure.

• Associated areas such as maintenance, repair, and overhaul (MRO) and training offer high investment potential. A report by Ernst & Young says the MRO category in the aviation sector can absorb up to US$ 120 billion worth of investments by 2020.

• Aerospace major Boeing forecasts that the Indian market will require 1,000 commercial jets in the next 20 years, which will represent over 3 per cent of Boeing Commercial Airplanes’ forecasted market worldwide. This makes India a US$ 100 billion market in 20 years.

• Aviall Inc, a wholly owned Boeing subsidiary, plans to open a business office in India later in the year. One of the largest providers of new aviation parts and related aftermarket services in the aerospace industry, Aviall’s India, will be headquartered at the Noida Special Economic Zone in Uttar Pradesh.

• US-based business jet maker Hawker Beechcraft Corporation (HBC) has opened its first authorized service centre in Delhi in partnership with Interglobe General Aviation, the promoter group of IndiGo, with a total investment of US$ 8 million. Two more centres, one in Mumbai and another in southern India, are likely to come up by 2009. Hawker Beechcraft has the maximum number of business jets flying in India.

• Richard Branson, who controls UK carrier Virgin Atlantic Airways Ltd, has sought permission to start a domestic airline in India.

• ETA Star, one of Dubai’s household names, will invest over US$ 1 billion to cash in on booming sectors such as ports and aviation.

• The US pioneer in fractional aircraft ownership, NetJets is planning to expand in India after foraying into the Middle East market and establishing itself in Europe with 140 aircrafts.

• GMR Infrastructure is looking to tap the growing corporate jet market in India, which is expected to rise from the existing 150-190 to over 500 in the next four years with investment plans to the tune of US$ 151 million.

• Major private equity firm, TPG Capital, figures among the potential investors lining up to invest over US$ 400 million for a substantial stake in Vijay Mallya-led Kingfisher Airlines, according to multiple sources. Kingfisher, with over 28 per cent share of the domestic aviation market, with a fleet of 86 Airbus and ATR aircraft, is into the 40th month of operations and recently started flying international, with the maiden Bangalore-London flight on September 5.

• Jet Airways (India), the country’s largest private airline, is looking for an international funds partner to dilute 10 per cent equity. The company first entered India in 1993 and is now also operating in overseas destinations.

Airlines & the Aircraft Manufacturing Industry Airlines purchased new aircraft typically from either Airbus Industrie (a European consortium of aircraft companies strongly supported by the French and German governments) or Boeing (an American aircraft manufacturer). As there were significant cost advantages in having a standard fleet, airlines tended to be loyal to a manufacturer for a particular category of aircraft. Both Airbus and Boeing offered families of aircraft with different seating capacities but common cockpit systems that facilitated pilot and engineer certification across the family. The A-320 family of Airbus (A319/A320/A321) and the Boeing-737 family of Boeing (Boeing 737- 00/800/900) were both well-engineered and state -of-the-art. They had excellent records for reliability and safety. Since aircraft are built -to-order and manufacturing capacity can’t be ramped up and down very easily, airlines had to order aircraft in advance and wait for delivery. In addition to firm orders, airlines could also book “options” for the purchase and delivery of aircraft.

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Aircraft Manufacturers & their Indian Customers Boeing 737 family: Jet, Jetlite, SpiceJet, Air India (for international short-haul) A320 family: Air India, Kingfisher, IndiGo, GoAir, Deccan ERJ170 (Embraer): Paramount CRJ series (Bombardier): Jetlite and Air India (domestic) ATR: Jet, Kingfisher, Deccan, Air India (domestic)

3.4 PORTS History and Existence The earliest known port in India can be dated back to the 2500 BC during the Harappan Civilization – a tidal dock at Lothal (near present day Mangrol Harbor on the Gujarat coast) with the civilization having established trade with Mesopotamia. The earliest known reference to an organization of ships can be found in the Kautilya’s ‘Arthashastra’ that contains a full chapter on the state department of waterways under ‘Navadhyaksha’ meaning ‘Superintendent of Ships’, which dates back to the Mauryan empire from the 4th century BC onwards. Notably, various other references have been found during other ancient Indian dynasties such as the Kalinga Empire, the Cholas, and the Satavanhanas among others. With the coming of Europeans and the British, the establishment and development of ports gained significance with the Kolkata Port constructed by the British East India Co. being the oldest operating port today. India’s long navigable coastline spanning over 7500 kilometers forming one of the biggest peninsula in the world plays an important role in the import and export of cargo. Understanding the importance of establishing a strategic network of ports to promote regional economic development, the Government of India, post liberalization period, has given a major boost to the Industry. Today, the Indian port sector has emerged the unsung hero in India’s efforts to increase its global presence. The country’s booming economy along with its foreign trade has given a tremendous boost to the sector, which has been instrumental in increasing India’s share in world trade from 1.1 per cent in 2004 to 1.5 per cent in 2006. A lion’s share of India’s international trade, 95 per cent by volume and 70 per cent by value, is carried out through maritime transport. Strategically located on the crucial East-West trade route, India has a 7,517-km coastline studded with 12 major ports and 200 minor/intermediate ports. Major ports handle about three-fourths of the total sea-borne traffic. 60 out of 200 of the minor ports are handling traffic and several of these minor and intermediate ports are merely “notified,” with little or no cargo handling actually taking place. These ports have been identified to be developed, in a phased manner, by the respective governments to be developed, a good proportion of them involving Public-private partnership. India has committed to spend US$ 100 billion over the next ten years on infrastructure projects, with US$ 10 billion to be spent just on the shipbuilding and port sectors within the next five years. Classification of Ports in India The classification of Indian ports into major, minor and intermediate has an administrative significance. As per the constitution of India, maritime transport falls under the “concurrent list,” to be administered by both the Central and the State governments. While the Central Shipping Ministry administer the major ports, the minor and intermediate ports are administered by the relevant departments or ministries in the nine coastal states of West Bengal, Orissa, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Goa, Maharashtra, and Gujarat. There are also 7 shipyards under the control of the central government of India - 2 shipyards controlled by state governments, and 19 privately owned shipyards. Shipyards and dockyards are places, which repair and build ships. These can be yachts, military vessels, cruise liners or other cargo or passenger ships. Dockyards are

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sometimes more associated with maintenance and basing activities than shipyards, which are sometimes associated more with initial construction.

Major Ports in India

Kolkata - The Port has two distinct dock systems - Kolkata Docks at Kolkata and a deep water dock at Haldia Dock Complex, Haldia. The port is the nation’s second largest container port. It was one of India’s fastest growing ports in 2004-05. Paradip - It is an artificial harbor, which accepts sea traffic via man made lagoons. Paradip is emerging as a major investment in India with several upcoming steel plants, alumina refineries, thermal power plants, and a petrochemical complex. Paradip will become one of the five or six major Special Economic & Investment Regions planned in India, along the lines of Pudong in China, Rotterdam in Europe, and Houston in North America. Vishakhapatnam – It is the most protected natural harbor in Asia. The British started building the harbor in 1927 and was opened to traffic in 1933. Today, it houses the Eastern Naval Command apart from being one of the top traffic handlers in each of the last six years. Chennai – It is a 125 year old artificial port and is one of India’s oldest. From handling a meagre volume of cargo in the early years consisting chiefly of imports of oil and motors and the export of groundnuts, granite and ores, the port is moving towards handling 500 lakh (50 million) tonnes of cargo this year. It has 3 Docks – Dr. Ambedkar Dock, Jawahar Dock, Bharathi Dock, and Container terminal. Tuticorin (Thoothukudi) – The major harbor of Tuticorin is well known as a pearl diving and fishing centre. Tuticorin, one of the oldest seaports in the world, was the seaport of the Pandyan kingdom after Korkai and later was taken over by the Portuguese in 1548, captured by the Dutch in 1658, and ceded to the British in 1825 (Courtesy - The Columbia Encyclopedia, Sixth Edition, 2001). The lighthouse built in 1842 marked the beginning of the history of Thoothukudi harbour development. On 11th July 1974, the newly-constructed Thoothukudi port was declared to be the tenth major port in India, second-largest port in Tamil Nadu and third-largest container terminal in India after JN Port (Mumbai) and Chennai. Thoothukudi is an artificial port. The Sethusamudram Shipping Canal Project, a project to create a shipping channel through the shallow Palk Strait to allow passage of larger ships, is headquartered at the Port of Thoothukudi. This port has been chosen to be an undersea cable landing station. The optical fiber cable will run between Mt Lavinia (Sri Lanka) and Tuticorin (325 km) with an initial bandwidth of 20 gigabits per second, later to be upgraded to 160 gigabits per second. This will promote the IT investment in South India by improved telecom infrastructure. Kochi (formerly known as Cochin) – Kochi was a major settlement for the Portuguese, Dutch, and then the English. Towards the early 20th century, trade at the port had increased substantially, and Harbour engineer Robert Bristow was brought to Kochi in 1920 under the direction of Lord Willingdon, then the Governor of Madras. In a span of 21 years, Kochi became known as one of the safest harbours in the peninsula, where ships berthed alongside the newly reclaimed inner harbor equipped with a long array of steam cranes. Kochi is the headquarters of the Southern Naval Command, the primary training centre of the Indian Navy. The Cochin Shipyard in Kochi is the largest shipbuilding facility in India. The Cochin fishing harbor, located at Thoppumpady is a major fishing port in the state and supplies fish to local and export markets. To further tap, the potential of the all-season deep-water harbor at Kochi, an international cruise terminal and several marinas are being constructed. The Cochin Port currently handles export and import of container cargo at its terminal at Willington Island. A new international container transshipment terminal—the first in the country—is being commissioned at Vallarpadam.

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New Mangalore Port - known by the name of New Mangalore Port Trust (NMPT) is the only major port of Karnataka and is currently the ninth largest port in India. The construction began in 1962 and was formally inaugurated on May 4, 1974 by the then prime minister Indira Gandhi. The port is situated at Panambur, Mangalore, 310 kms south of Mormugao Port and 354 kms north of Kochi Port. Mormugao – A favored port of the Portuguese commissioned in 1883. It is today Goa’s main Port. It is one of India’s best natural harbor and one of the oldest ports. It was declared a major port in 1963-64 known for its Iron ore exports. Mumbai – The Mumbai Port is managed by the Bombay Port Trust now known as Mumbai Port Trust which was founded by the great ship builder Jamshedji Wadia in 1872. It is 134 years old and has been the principle gateway for many years with natural deep water harbor of 400 kms. Nhava Sheva (also called Jawaharlal Nehru Port) is the largest container port in India. The port was sanctioned to relieve pressure of the port of Bombay (Mumbai) in Bombay proper and has three terminals: JNPCT, NSICT, and GTI (Gateway Terminal of India). NSICT is India’s first privately managed container terminal. It is run by DP Ports. Currently, it is managed under a Build-Operate-Transfer agreement set up with the Jawaharlal Nehru Port Trust (JNPT) of the Government of India. The port was created to augment the shipping capacity and to provide an alternative to merchants wanting to save octroi charges imposed by the Brihanmumbai Municipal Corporation. Ennore Port - Ennore is situated on the coromandal coast about 24km north of Chennai Port along the coast line, in the State of Tamil Nadu, India. It is the 12th Major Port in India and the first Corporatised Major Port in India. Ennore Port was originally conceived as a satellite port to the Chennai Port, primarily to handle thermal coal to meet the requirement of Tamil Nadu Electricity Board (TNEB). The scope was expanded taking into account subsequent developments such as the plan of Government of Tamil Nadu to set up

1. A 1880 mw LNG power project in association with a Private consortium 2. A large Petro Chem Park 3. A Naphtha Cracker Plant

The pollution and environmental hazards caused while handling iron ore and coal in the Chennai harbor and nearby habitations also necessitated shifting these cargo items from the Chennai Port. This was the rationale behind planning of berths for coal berth (for users other than TNEB) Iron ore, LNG, POL, Chemical and other liquids and Crude to serve various industries that would come up on the proposed Perto Chem Park. These factors have contributed to the evolution of Ennore Port as a multi-functional energy port. Kandla Port – With the handing over of the Port of Karachi to Pakistan, North-West India lost an outlet to the sea. On January 20, 1952, the then Prime Minister, Late Shri Jawaharlal Nehru laid the foundation stone for the new Port. It was declared a Major Port in 1995. Consistent, enlightened policies have ensured that the port stood up to the challenge of the surging flood of trade created by a hinterland that covers over a million sq. km. from the north and North-West of India. Kandla today has become the hub of India’s food grains and oil imports. Kandla is a self sufficient, self-enhancing Port with a natural, protected harbor. It is also among the highest revenue earning Port of India. Kandla Port is one of the most economical major ports in terms of tariff and operational expenditure. The efficiency and all prerequisite user facilities confirm to international standards. The Port’s emphasis is on being up to date with the latest technological innovations.

Port Traffic

According to the Indian Ports Association, the 12 major ports together handled a total of 519.24 million tonnes (MT) of cargo in 2007-08, an increase of 11.94 per cent over 463.78 MT handled in 2006-07. Further, the total cargo traffic handled by the 12 ports during April-September 2008 has been 261.73 million tonnes as against 244.14 million tonnes in the corresponding period last fiscal. In 2008-09, cargo traffic at major ports increased to 530.4 MT.

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India is also likely to emerge as a major destination for container operations. With a strong growth for shipping raw materials and exporting finished products, the container cargo traffic at the major ports grew by 19.03 per cent in 2007-08. The container trade went up to 7.2 million twenty-foot equivalent units (TEUs) by 2007 from 2.47 million TEUs in 2000. The 12 major ports handled 6.6 million twenty foot equivalent units (TEUs) in 2007-08 as against 5.44 million TEUs in 2006-07. Jawaharlal Nehru (JN) Port, India’s biggest container port, handling 4.06 TEUs, accounted for over 61 per cent of the total cargo shipped in steel containers. Chennai, the country’s second biggest container port, handled 1.02 million TEUs in 2007-08, an improvement over previous year’s 798,000 TEUs. The Indian shipbuilding industry comprising 27 shipyards—including eight public sector and 19 private sector shipyards—is on a roll driven by the booming maritime trade. According to an industry report, the shipbuilding sector has witnessed a 359 per cent increase in the turnover of shipyards from US$ 216.60 million to US$ 778.90 million in the last five years. By 2012, it is likely to corner around 3 per cent of the global share with an annual turnover of US$ 3.72 billion. Paradip Port has handled 18.21 million tonnes of cargo during April-July 2009, registering a growth of 22.21 per cent over 14.90 million tonnes handled during the corresponding period last year, recording the highest growth rate during the four months among all the major ports of the country. The handling capacity of Paradip Port is also expected to be increased to 134 million tonnes per annum (MTPA) by the 2011-12. Under the 100-days' programme of the UPA government, the shipping ministry has proposed to award a contract for six port projects costing US$ 690.16 million on a public private partnership (PPP) basis. The six projects are expected to add capacity of 31.23 MT and 1.97 million TEUs.

Non-Major Ports

India has 187 non-major or minor ports which come under the jurisdiction of the respective state governments. The share of non-major ports in cargo traffic has increased from less than 10 per cent in 1990 to the current level of 26 per cent. Non-major or minor ports handled 185.54 mt of cargo in the 12 months to March 2007. The cargo handling capacity of India’s non-major ports, both existing and new ones such as Mundra, Pipavav and Kakinada, is projected to rise to 839.16 MT a year from the existing 228.31 MT during the 11th plan (2007-2012), which is 610.85 million tonnes per annum more. A section of experts feels that new capacity could add up to one billion tonnes by 2011-12. Gujarat, Maharashtra and Andhra Pradesh are likely to drive the port capacity expansion of the country over the next five years. Government Initiatives

The Indian government prioritized the expansion and modernization of ports as part of its initiatives in the year 2007. The government has been instrumental in redefining the role of ports from mere trade gateways to being integral parts of the global and logistics chain.

• A comprehensive National Maritime Development Policy has been formulated to facilitate private investment, improve service quality, and promote competitiveness. The Indian government has set up the National Maritime Development Plan (NMDP) to improve facilities at India's 12 major ports and it plans an expenditure of around US$ 12.4 billion.

• A further investment of over US$ 9.07 billion will be made for 111 Shipping Sector Projects by 2015.

• The Ministry of Shipping is launching 10 major expansion projects in 2008-09 at an estimated investment of US$ 1.06 billion with 60 per cent of investments allocated for the Chennai mega container terminal.

• 100 per cent foreign direct investment (FDI) under the automatic route is permitted for port development projects.

• 100 per cent income tax exemption is provided for a period of 10 years for port developmental projects.

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• Tariff Authority of Major Ports (TAMP) regulates the ceiling for tariffs charged by major ports/port operators (not applicable to minor ports).

• Government has opened up all the areas of port operation for private sector participation.

• Increasing the rail connectivity of ports with the domestic market.

• The Indian government is considering a US$ 2 billion package to help local shipping firms finance new vessel acquisitions as global lenders tighten up their purse strings.

• Setting up a deep draft port in West Bengal with the facility to receive vessels requiring a minimum draft of 17 metres.

• The Gujarat government has taken new initiatives for the Sagarkhedu programme (launched for the all round development of the coastal areas) to develop ship-building/repairing yards, private ports, jetties, captive jetties, VTMS system, training and introduction of new marine courses and implementation of schemes relating to RO-RO ferry services at 22 coastal areas of the state.

• The Ministry of Shipping is launching 10 major expansion projects in 2008-09 at an estimated investment of US$ 1.06 billion with 60 per cent of investments allocated for the Chennai mega container terminal.

Investments in Indian Ports The Indian port sector has witnessed both foreign and domestic investors rushing to cash in on the maritime boom, in addition to several public private partnerships (PPP) in the recent years. Port majors in countries like China, France, and Britain are keen to invest in Indian ports. This could be towards setting up greenfield projects, improving productivity at existing ports and setting up other facilities like container terminals and roads.

• L&T has a joint venture agreement with the Tamil Nadu Industrial Development Corporation to establish an integrated shipyard complex with a port facility at about US$ 686.21 million.

• L&T is also midway in the development of an all-weather deep port along with Tata Steel at Dhamra on the Orissa coast at a cost of US$ 511.54 million.

• The Tuticorin Port will develop coal handling facilities for state-run Neyveli Lignite Corporation (NLC) and Coastal Energy Company with a combined investment of around US$ 145.56 million.

• The Visakhapatnam port will invest US$ 540.65 million over the next two years to increase its handling capacity to 125 million tonnes from the existing 65 million tones.

• Key shipping companies, such as Shipping Corporation of India (SCI), Great Eastern (GE) and Essar, have already placed orders worth US$ 3.3 billion for 58 ships in Korea and China.

• State-run Shipping Corp has planned capital expenditure to the tune of US$ 3 billion in the eleventh Five-Year-Plan period and currently has an order pipeline for 29 new ships.

• Jurong Port Authority of China has firmed up plans to set up a greenfield port on the east coast with Sical Logistics, involving an initial investment of US$ 319.48 million.

• Mumbai Port Trust is entering into a sister port agreement with the Port of Marseille-Fos of France.

• The Irish Port Authority is likely to invest in Jaigarh Port in Maharashtra.

• The international container transshipment terminal (ICTT) project, being developed at Vallarpadam, Kochi, will be the largest single player among the container terminals planned in India and the first to operate in an SEZ in India.

• The Port of Rotterdam Authority, which manages Europe’s biggest port - The Port of Rotterdam - plans to set up a company in partnership with a local private firm to manage ports in India.

• All Cargo Global Logistics, a multi-modal logistics service provider, has firmed up plans to set up two greenfield ports on both coasts of the country for an estimated investment of US$ 425.97 million.

• Maruti Suzuki India Ltd (MSIL) and Mundra Port and Special Economic Zone Ltd (MPSEZL) signed an agreement for a mega car terminal, expected to be operational by December 2008, at Mundra in Kutch district of Gujarat. The initial investment is pegged at US$ 21.29 million.

• Public sector logistics major Container Corporation of India (Concor) is eyeing offshore business opportunities to tap offshore businesses by securing ports and shipping facilities. Concor is also looking to build the Marauli port in Gujarat.

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• Tuticorin Port Trust (TPT) is planning to invest US$ 1.10 billion to create additional capacity and infrastructure projects through the public-private partnership (PPP) mode by 2012.

According to the planning commission, there is an investment opportunity of US$ 25 billion by 2011-12 in India’s shipping and ports sectors, as the country seeks to double its ports capacity to 1,500 MT (major ports capacity to 1,000 MT and non-major ports to 500 MT capacity). While segment-wise ports sector would provide a US$ 13.75 billion investment opportunity, shipping and inland waterways are likely to present US$ 11.25 billion investment opportunity. Shipbuilding

India ranks ninth in terms of investment in shipbuilding and with the proposed capacity additions, the country is likely to further move up in the global rankings. Buoyed by this estimated surge in demand, many shipbuilders are lining up huge investments into this segment. Consequently, India’s share in the global shipbuilding business is likely to grow to around 15 per cent by 2020 from 0.4 per cent in 2007, according to a report by consultancy firm, i-maritime. The year 2007 has been outstanding for the Indian shipping tonnage, which crossed the 9 million gross tonne (GT) mark. As a result, India Inc is increasingly seeking to cash in on the maritime boom with corporate interested in power, cement, iron ore, etc adding up fleets through acquisitions as well as going for new-builds. The last six months have witnessed approximately a dozen ships added by corporate entities. Indian companies such as Gujarat Ambuja Cement, India Cement and Tata Power have either bought ships or are in the process of acquiring whereas Videocon and Reliance Power are mulling vessel acquisition. The Indian ship building industry comprising 27 shipyards including eight public sector and 19 private sector shipyards is on a roll driven by the booming maritime trade. According to a FICCI report, the ship building industry has witnessed an unprecedented growth in demand for building new vessels which has led to a 359 per cent increase in the turnover of shipyards from US$ 216.60 million to US$ 778.90 million in the last five years. Further, the Indian ship building industry is estimated to garner a share of about 3 per cent of the global ship building industry with an annual turnover of US$ 3.83 billion by 2012. Moreover, as per a report prepared by I-Maritime Consultants, India’s share in global shipbuilding is expected to be around 15 per cent by 2020 from 0.4 per cent in 2007. The closure of yards in Europe and other developed regions has given Indian shipbuilders an opportunity to capture a higher share of the international shipbuilding market. It is estimated that the strong demand for cargo ships - coupled with the inability of market leaders China, Japan and South Korea to meet requirements - has propelled the flow of jobs to India. The labour cost per worker in India being comparatively lower, apart from skilled welders and fitters, India has world-class naval engineers and architects. These, along with top-class management, are expected to be the growth drivers of the Indian shipbuilding industry. Buoyed by this estimated surge in demand, many shipbuilders like ABG, Bharati, Larsen & Toubro, Pipavav, Mundra, the Pawan Kumar Ruia Group, Dolphin Offshore, Gujarat Shipbuilding, Mercator Mech Marine and Startek Marine among others are lining up huge investments into this segment.

• Larsen and Toubro Ltd has chosen Kattupalli port, in Thiruvallur district, near Chennai, as the location to build its over US$ 425.97 million mega shipbuilding yard.

• Gujarat-based Adani group is setting up a ship building and repair yard at a cost of about US$ 212.98 million.

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• ABG Shipyard, a leading private shipyard, has decided to set up a greenfield shipyard in south Gujarat with an investment of US$ 255.58 million. The new shipyard will be set up over 300 acres.

Voyage Ahead

Further, with a growth rate of 19 per cent, India’s container cargo traffic is estimated to reach 21 million TEUs by 2016. Traffic at the ports has been growing at a brisk pace and therefore, increasing cargo handling capacities of the ports is crucial to India. According to a study by ICRA, driven by a buoyant world economy and high growth in merchandise exports, the Indian port traffic is estimated to grow at the rate of 10-12 per cent per annum over the next five years (2007-12). The overall port traffic at both major and minor ports are estimated to grow from 588.63 MT in 2006-07 to 1008.95 MT by 2012. This projected increase in port traffic will in turn necessitate capacity expansion of the ports. Already, 276 projects entailing an investment of US$ 13.70 billion have been identified. These include development of new berths, expansion and upgradation of existing berths, deepening of channels, equipment modernization and upgradation of rail and road connectivity. To meet this demand, India's ports are likely to increase cargo handling capacity to 1,855 MT by 2012 from the present 758 MT, with an investment of about US$ 20.61 billion, as foreign trade expands. Private firms are likely to invest about 65 per cent of this amount. To achieve the projected traffic target of 615.70 MT to be handled at major ports by 2011-12, it is estimated that capacity of about 800.41 MT would be needed. Therefore an additional capacity of around 403 MT has to be built up by 2011-12, against the current capacity of 397 MT. Furthermore, several states have drawn up major capacity expansion plans to meet the expected surge in port traffic over the next five years. These include 214 mtpa in Gujarat, 92 mtpa in Andhra Pradesh, 104 mtpa in Maharashtra, 49.15 mtpa in Tamil Nadu, 28.9 mtpa in Kerala, 55 mtpa in Orissa, and 46 mtpa in Karnataka among others. Moreover, the Investment Commission expects an investment of US$ 7.7 billion in minor ports. Shipping Secretary, Mr A P V N Sarma, has said that India would build 50 new ports over the next five years as it looks to overhaul old infrastructure and reduce congestion at ports that is holding up trade and growth. 3.5 POWER SECTOR An economy’s growth, development, ability to handle global competition is all dependent on the availability, reliability and quality of the power sector. As the Indian economy continues to surge ahead, electrification and electricity services have been expanding concurrently to support the growth rate. The demand for power is growing exponentially and the scope of growth of this sector is immense. The primary agency responsible for the power sector in India is the Ministry of Power, which started functioning with effect from 2nd July 1992. As the Indian economy continues to surge ahead, its power sector has been expanding concurrently to support the growth rate. The demand for power is growing exponentially and the scope of growth of this sector is immense.

History of Power Sector in India

Year Details Remarks 1880s First Electrification Commercial production & Distribution starts in Calcutta.

Indian Electric Co., registered in London in 1895, given the license to distribute and sell in 1896. A small Hydel Power plant established in Darjeeling – ‘Sidrapong Hydel Power Station’ was commissioned in 1897. Thermal Power was started in 1899.

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1903 - 1910 Indian Electricity Act passed in 1910

Initially in 1903, Calcutta Electricity Supply Co. was given the license and on the same lines extended to Bombay, Kanpur, and in 1907 to Madras and Delhi.

1948 Indian Electricity Act 1948 In 1947, at the time of Independence, the installed capacity was 1363 MW only. The generation, distribution, and sale of electricity were solely under private ownership till this enactment. State Electricity Boards were formed. Central Electricity Authority constituted to support the state electricity boards, which has been superseded by Electricity Act 2003.

1956 Industrial Policy Resolution Electricity Generation and Distribution brought under Schedule A – reserving the right for the above under public sector.

1960s and 70s

Impetus for Energy Policies In 1969, Rural Electric Corporation was established to accelerate the generation of electricity for the rural areas. 1975 – National Thermal Power Corporation (NTPC) and National Hydel Power Corporation (NHPC) established. 1976 – North Eastern Power corporation was established and atomic power stations were established. Use of Non conventional source of energy came into vogue.

1989 NPTC Set up This was renamed as Power Grid Corporation of India in 1992.

1991 Liberalization Amendments made in the Electricity Supply Act.

1992 Ministry of Power constituted 1995 Policy for mega power projects


1998 CERC and SERCs set up The main function of ERCs (Electricity Regulatory Commission) to regulate the tariffs.

2001 Energy Conservation Act passed The act was constituted to bring about awareness of energy conservation for prescribing guidelines and other allied/related activities.

2003 New Energy Act passed The act focuses on the consumer. Its aim was to introduce competition by making the process of setting up a thermal power plant easier by removing the need for techno-economic clearance.

2006-07 Power generation Power generation capacity at 551.7 billion units. 2007-08 Expanded generation capacity From 105045 MW at the end of 2001-02, rapid expansion

has enabled power generation to the extent of 143311 MW at the end of April 2008.


India ranks sixth, globally, in terms of total electricity generation. India’s electricity generation capacity has been increasing continuously to meet the needs of the rapidly growing economic activity of the country. Total installed capacity of electricity generation has expanded from 105,045.96 MW at the end of 2001–02 to 150,323.41 MW at the end of June 2009. In terms of installed capacity, the state sector accounts for the most, followed by the Central and private sectors.

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Total Installed Capacity (As on September 30, 2009)

Sector MW Per cent

State Sector 76,626.71 52.5

Central Sector 49,842.63 34

Private Sector 25,890.75 13.5

Total 1,52,360.09 100

Source: Ministry of Power, India.

Source-wise, thermal power plants account for an overwhelming 63.9 per cent of the total installed capacity, producing 96,044.24 MW. Hydel power plants come next with an installed capacity of 36,916.76 MW, accounting for 24.6 per cent of the total installed electricity generation capacity. Besides thermal and hydel power, renewable energy sources contribute 8.8 per cent to the total power generation in the country producing 13,242.41 MW. Nuclear energy makes up the balance 2.7 per cent contributing 4,120 MW.

Major domestic players National Thermal Power Corporation Limited (NTPC) is the sixth largest thermal power producer in the world and India’s largest power producer. It is state owned with operations across the country. NTPC has gone beyond the thermal power generation. It has diversified into hydro power, coal mining, power equipment manufacturing, oil & gas exploration, power trading & distribution. NTPC is now in the entire power value chain and is poised to become an Integrated Power Major. Tata Power is pioneered by the Tata Group with its existence dating back to nine decades with presence in all segments – Thermal, Hydro, Solar, Wind Energy, Transmission & Distribution. Tata Power has lots of credits to itself including – • Licensed installed generation capacity of 1798 MW for Mumbai - Largest by any Licensee • India’s largest power utility - Accounts for 52% of the total generating capacity of the private sector as a

licensee • First ever Load Dispatch Center in India to have gotten ISO Certification (11 August 2004) Reliance Energy Limited is one of India’s leading integrated power utility companies in the private sector. Apart from generation, transmission, and distribution of power, it has also forayed into infrastructure business including Mumbai metro rail project and various road projects under NHAI, making it one of the leading companies in India in the Engineering, Procurement, and Construction (EPC) segment of the power sector. Torrent Power entered power sector before the liberalization by taking over an ailing cable company in 1989 that has gone on to be a success and known today as Torrent Cables Limited. Turnaround came with the acquisition of two old state owned electricity companies, namely, The Surat Electricity Company Limited and The Ahmedabad Electricity Company Ltd., and turned them into successful power utilities comparable with the best. Bharat Heavy Electricals Ltd. is the largest engineering and manufacturing enterprise in India in the energy-related/infrastructure sector. It has installed equipment for power generation -- for Utilities, Captive and Industrial users. It is thesSupplier of transformer and other equipments operating in transmission & distribution network,

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motors with drive control system to power projects, Petrochemicals, Refineries, Steel, Aluminum, Fertilizer, Cement plants, etc., traction electrics and AC/DC locomotives for railway networks, and valves to Power Plants and other Industries. It is one of the most profitable PSUs and part of the elite ‘Navratnas’ of India.

Government Initiatives The government has taken several proactive steps to open the sector for the private players and realise the full potential of the country in the power sector.

• Introduction of the Electricity Act 2003 and the notification of the National Electricity and Tariff policies.

• Constitution of Independent State Electricity Regulatory Commissions in the states.

• Unbundling of the State Electricity Boards (SEBs) into generation, transmission, and distribution companies for better transparency and accountability.

• Allowing the private sector to set up coal, gas or liquid-based thermal projects, hydel projects and wind or solar projects of any size.

• Allowing foreign equity participation up to 100 per cent in the power sector under the automatic route.

• Deregulation of the ancillary sectors such as coal.

• Providing income tax holiday for a block of 10 years in the first 15 years of operation and waiver of capital goods’ import duties on mega power projects (above 1,000 MW generation capacity).

• The government has also taken up some ambitious programmes like the Ultra Mega Power Projects (UMPP), Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGVY), Accelerated Rural Electrification Programme and the goal of Power for All by 2012 among others to rapidly increase the installed capacity as well as expanding the network of people who have access to electricity.

Investments The liberalization of the rules for the participation of private players (both domestic and foreign) has led to the spurt in investment in this sector. This, along with the continuous rise in the government outlay for the power segment, meant that there has been a rapid rise in the investments flowing into this sector. Out of US$ 132.13 billion of total corporate announcements made in the first half of calendar year 2008, power sector attracted the maximum number of investment announcements totaling to US$ 40.84 billion between January to June 2008, according to an ASSOCHAM study.

• India’s largest power utility, National Thermal Power Corporation (NTPC) would be investing up to US$ 36 billion by 2012 to transform itself into an integrated regional energy player and have an installed capacity of over 50,000 MW.

• Reliance Power Transmission will invest nearly US$ 348.66 million in setting up a 1,500-km transmission line.

• Hyderabad-based Greenko Group plans to invest about US$ 300 million in three years for setting up about 15 clean energy projects in the country.

• Japan Bank of International Cooperation (JBIC) has agreed to lend US$ 153.1 million to L&T-MHI Boilers Private Ltd (LTMB) for manufacturing and sale of thermal power generation facilities in India.

• Private power equipment makers such as Alstom and Toshiba will set up their power manufacturing base in India in the next three-four months.

• The country’s largest hydel power company National Hydro Power Corporation (NHPC) plans to double the power generation to over 10,000 MW by 2011–12.

• Reliance Energy Limited, India’s largest integrated private sector power utility company, plans to invest US$ 12.50 billion over the next five years to add 15,000 MW of power generation capacity.

• Essar is planning to invest US$ 1.00 billion to set up a 1200 MW power project in Gujarat.

• Damodar Valley Corporation (DVC) plans to add 5,000-MW generation capacity in the Twelfth Plan (2007–12) at an investment of US$ 4.16 billion.

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• Lanco plans to install 3000 MW hydro-power stations by 2015 with US$ 3.75 billion worth of investment.

• B C Jindal group plans to invest US$ 4.16 billion to produce 5,000 MW power.

• Consumer electronic maker, Videocon, plans to invest US$ 5.21 billion on building thermal power projects aggregating 5,000 MW.

• The National Thermal Power Corporation (NTPC) has signed a Memorandum of Understanding (MoU) with the Chhattisgarh government to set up a 4000-MW power project in the state. The project cost has been estimated at US$ 4.09 billion.

• Sterlite Industries, the country’s largest private sector power producer, is planning to invest US$ 4.1 billion over the next year to create additional capacity of 4,500 MW.

• Power Finance Corporation (PFC) will raise US$ 4.75 billion by the end of this fiscal for financing various power projects.

• The Haryana government has drawn up an investment plan of US$ 377.48 million for the current financial year to strengthen the power distribution system in the state.

Growth Potential While the present capacity addition is commendable, there is still huge scope for growth. With a targeted gross domestic product (GDP) growth rate of 8–10 per cent and an estimated energy elasticity of 0.8 per cent, India’s energy requirement is expected to grow at 6.4–8 per cent, implying an almost five- fold increase in India’s energy requirement in the next 25 years. Consequently, there is a need to increase the electricity generation capacity to sustain the growth momentum. According to a report by KPMG and CII, India’s energy sector will require an investment of around US$ 120 billion–150 billion over the next five years. Moreover, while the annual per capita electricity consumption has increased from 613 kwh/year in 2004–05 to 672 kwh/year in 2006–07, it is still low compared to the world average of 2596 kwh. Consequently, the government revised its target of power capacity addition to 90,000 MW in the 11th Five-Year Plan (2007–12), up by 11,423 MW from the earlier estimate of 78,577 MW to sustain the growth momentum of the economy. Of the earlier projected capacity of 78,577 MW, projects worth 63,312 MW are currently being implemented. Of these, 18,177 MW are in the private sector. This, however, does not include captive generation projects, and projects whose benefits will be taken into account during the 12th plan period (2012–17), such as the three ultra-mega-power projects. The projects currently being implemented include 32 coal blocks having total extractable reserves of 9,916 million tones (MT) and having the capacity to feed 29,000 MW. These have been allotted to various state and central public sector units and Independent Power Producers (IPPs). Further, according to the Planning Commission estimates, renewable energy (RE) projects worth US$ 16.50 billion, for the generation of 15,000 MW power, would come up in the 11th Plan. Moreover, the government has earmarked a total capital subsidy of US$ 6.88 billion for providing electricity connections and for the distribution of infrastructure to rural households. Nuclear Power Generation Now that the Indo-US nuclear deal has gone through and India has got the clearance from the Nuclear Suppliers Group (NSG), nuclear power generation is likely to throw up an opportunity of US$10 billion in the next five years, according to a JP Morgan estimate. As per the report, the Nuclear Power Corporation of India Ltd (NPCIL), a public sector undertaking spearheading India’s nuclear power programme, is likely to undertake 6800 MW of planned future projects which would translate into orders of US$ 10 billion over the next five years. GMR and

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Reliance Power have also expressed interest in nuclear power. Subsequent to the Indo-US nuclear deal and India getting clearance from the Nuclear Suppliers Group (NSG), nuclear power generation is likely to provide an opportunity of US$ 10 billion in the next five years, according to a JP Morgan estimate. India will now also be partnering several countries for nuclear fuel technology projects.

• As a part of the Eleventh Five-Year-Plan, Nuclear Power Corporation of India Ltd (NPCIL) will be commencing work on 12 reactors. NPCIL will be developing a series of nuclear reactors with capacities between 1,000 MW to 1,650 MW at 5-6 sites along the country's coastline.

• GE Hitachi Nuclear Energy has tied up with NPCIL and Bharat Heavy Electricals Ltd (BHEL) for building multiple GEH-designed nuclear reactors.

• Sweden sees a market of around US$2 billion in India for back-end operations like nuclear waste management.

• NTPC Ltd and NPCIL would jointly invest around US$ 3.09 billion in the next eight years to set up nuclear power plants in the country.

• BHEL plans five joint ventures in the nuclear sector and locomotive manufacturing. The company has decided to invest US$ 204.4 million in a castings and forgings joint venture.

• French-major, Areva is planning a large scale nuclear reactor forgings facility in India with Bharat Forge and will invest over US$ 408.79 million in two shell companies.

Renewable Power Segment-wise, thermal and hydro-based power projects are expected to account for 74.6 per cent (58,664 MW) and 21.1 per cent (16,553 MW) respectively. While these are huge planned capacity additions, there is still considerable potential to grow beyond these. For example, the total hydro power potential in India is a whopping 1,50,000 MW. In fact, the potential for growth is not confined to only conventional sources of power supply/generation, but is present in the renewable segment as well. In fact, India has the fourth largest installed capacity on wind in the world.

Renewable Energy at a Glance in India (MW)

Source/System Estimated Potential Achievement (as on 31 December 2007)

Wind Power 45,195 7844.52

Small Hydro Power 15,000 2045.61

Bio Power 16,881 605.80

Total Grid-interactive renewable power

84,776 11,272.13

Source: Ministry of New and Renewable Energy, India.

Significantly to realise the Eleventh plan period target with respect to capacity additions, already both the government and private players have been moving fast. According to Mr. Sushilkumar Shinde, Union Minister of Power, India, the investment requirement in the Indian power sector over the next five years is estimated at over US$ 249.89 billion, creating huge opportunities for growth in this sector. In fact, a recent study by consultancy major McKinsey estimates India’s power demand to increase from the present 120 gigawatt (GW) to 315-335 GW by 2017 — 100 GW higher than the current estimates—if India continues to grow at an average of 8 per cent over the next 10 years. This would require a five to ten-fold rise in power production, entailing investments worth US$ 600 billion over the next ten years.

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Voyage Ahead A recent study by consultancy major McKinsey estimates India's power demand to increase from the present 120 gigawatt (GW) to 315 GW–335 GW by 2017, if India continues to grow at an average of 8 per cent over the next 10 years. This would require a five- to ten-fold rise in power production, entailing investments worth US$ 600 billion over the next ten years. To feed its rapidly growing economy, India is planning to get an additional 60,000 MW of electricity from various hydro-power projects by the end of 2025. The government targets providing electricity for all by 2012. Under the Rajiv Gandhi Grameen Vidyutikaran Yojna, the Ministry of Power plans to electrify 120,000 villages in the current Five Year Plan (2007–12). 3.6 TELECOM The Indian telecommunications industry is one of the fastest growing in the world and India is projected to become the second largest telecom market globally by 2010. In April 2008, India overtook the US as the second largest wireless market, and as a pointer to the increasing global influence of Indian telecom companies, seven Indians have featured in the list of the world’s 100 most influential telecom leaders, compiled by Global Telecoms Business, an industry magazine. India added 113.26 million new customers in 2008, the largest globally. The country’s cellular base witnessed close to 50 per cent growth in 2008, with an average 9.5 million customers added every month. History and Evolution of Telecom Industry in India

Year Details

1851 First operational land lines were laid by the government near Calcutta (seat of British power)

1881 Telephone service introduced in India

1883 Merger with the postal system

1923 Formation of Indian Radio Telegraph Company (IRT)

1932 Merger of ETC and IRT into the Indian Radio and Cable Communication Company (IRCC)

1947 Nationalization of all foreign telecommunication companies to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government’s Ministry of Communications

1985 Department of Telecommunications (DoT) established, an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system)

1986 Conversion of DoT into two wholly government-owned companies: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas

1992 The telecom sector was opened up for private participation

1997 Telecom Regulatory Authority of India created.

1999 Cellular Services are launched in India; New National Telecom Policy is adopted.

2000 Corporatization of the DoT and the creation of a new state-owned telecom company, Bharat Sanchar Nigam Ltd. (BSNL) Opening up of India’s internal long distance market and the subsequent drop in long-distance rates as part of TRAI’s tariff rebalancing exercise

2002 The termination of VSNL’s monopoly over international traffic and the partial privatization of the company, with the TATA group assuming 25% stake and management control Legalization of IP telephony

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2003 Introduction of Calling Party Pays (CPP) system for cell phones; Unified licensing; Referring interconnect order

2004 Intra-circle merger guidelines; Internet and broadband penetration

2005 Unified licensing; quality of service regulation; rural telephony

2006 Number convertibility convergence

Highlights in 2007

• Having the world’s lowest call rates (2-3 US cents)

• The fastest growth in the number of subscribers (15.31 million in 4 months)

• The fastest sale of million mobile phones (in a week)

• The world’s cheapest mobile handset (US$ 17.2)

• The world’s most affordable color phone (US$ 27.42), and

• Largest sale of mobile handsets (in the third quarter)

Highlights in 2008-2009

• The total number of telephones has reached 4297.25 lakh as on March 31, 2009 as compared to 3004.92 lakh as on March 31, 2008.

• While 1292.33 lakh connections were added during the twelve months of 2008-09, about 108 lakh connections were added every month during the current fiscal year.

• The teledensity, as given in the following graph, has shown a sustained increase during last few years. It increased from 26.22% in March 2008 to 36.98% in March 2009.

• Rural teledensity has shown a noticeable improvement in 2009.

Segment wise break up as of March 2008

Description Figures Remarks Total wire-line service users 37.96 million It was 37.90 million in quarter ending December 2008. Rural wire-line subscriber base

10.58 million It was 10.68 million in quarter ending December 2008.

Village Public Phones 5.61 lakhs It was 5.39 lakhs in quarter ending December 2008.

Public Call Offices (PCO) 6.20 million It was 5.98 million in quarter ending December 2008. Total wireless subscriber users 391.76 million From 33.69 users in March 2004, it has steadily increased

every year to 52.22 in 2005, 98.77 in 2006, and 165.11 in 2007. It was 261.07 in March 2008 and 346.89 in quarter ending December 2009.

Technology wise break up of wireless subscribers

297.26 million GSM users 94.50 million CDMA users

75.88% 24.12 %

Internet services 13.54 million users

Besides 13.54 million, there are 117.82 million wireless data subscribers at the end of March 2009 (capable of accessing data services including internet through mobile handsets (GSM/ CDMA)).

Broadband Subscribers (with download speed of 256 kbps)

6.22 million Technology wise the break up of broadband users are – 5.364 million dsl based; 0.474 million cable modem; 0.244 million Ethernet lan; 0.042 million Fibre; 0.072 million radio; 0.020 million leased line and 0.002 million other technologies.

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Telephony Subscribers (Wireless and Landline): 479.04 million (July 2009) Cellphones: 441.66 million (July 2009) Land Lines: 37.41 million (July 2009) Yearly Cellphone Addition: 113.26 million (2007) Monthly Cellphone Addition: 14.38 million (July 2009) Teledensity: 41.08% (July 2009) Projected teledensity: 626 million, 46% of population by 2010.

Major telecom providers and their market share and performance as of March 2009 Wire-line service providers BSNL continues to be the major market leader in this segment with 29.34 million subscribers, yet a decrease of 7% from March 2008 when the subscriber base was 31.55 million. MTNL subscriber base has also gone down from 3.68 million to 3.57 million (2.99% decrease). Bharti is the leading private provider in this segment with 2.73 million users, an increase of 19.74% from 2.28 million in March 2008. Reliance has a percentage growth of 27.59% from 0.87 million in March 2008 to 1.11 million in March 2009. TATA/Hughes has the maximum percentage growth of 27.78 % from 0.72 million in March 2008 to 0.92 million in March 2009. Others (HFCL and Shyam) 0.29 million users. Wireless service providers The following table summarizes the performance under this segment as of March 2008

Service Provider March 2008 (in million) March 2009 (in million) %age growth over 12

months Bharti Airtel 61.98 93.92 51.53

Reliance 45.79 72.67 58.70

Vodofone 44.13 68.77 55.84

BSNL 40.79 52.15 27.85

Tata Tele 24.33 35.12 44.35

Idea 24.00 38.89 62.04 Aircel 10.61 18.48 74.18

Spice 4.21 4.13 -1.90

MTNL 3.53 4.48 26.91

BPL 1.29 2.16 67.44 HFCL 0.30 0.39 30.00

Shyam 0.11 0.60 445.45

Government Initiatives

The government has taken many proactive initiatives to facilitate the rapid growth of the Indian telecom industry.

• 100 per cent foreign direct investment (FDI) is permitted through the automatic route in telecom equipment manufacturing.

• FDI ceiling in telecom services has been raised to 74 per cent.

• Introduction of a unified access licensing regime for telecom services on a pan-India basis.

• Introduction of mobile number portability in a phased manner, starting in the fourth quarter of 2008.

• The government is implementing a program of connecting 66,822 uncovered villages under the Bharat Nirman programme. The government will invest US$ 2 billion to set up 1.12 lakh community service centres in rural India to provide broadband connectivity in 2008-09.

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• The Finance Ministry has declared a five-fold (from US$ 100 million to US$ 500 million) increase in the external commercial borrowings amount, which, companies involved in infrastructure sectors can borrow from overseas to spend in India.

• In another move, the Department of Telecommunications (DoT) has stated that foreign telecom companies can bid for 3G spectrum without partnering with Indian companies. Only after winning a bid would they need to apply for unified access service license (UASL) and partner with an Indian company in accordance with the FDI regulations.

• Further, the Reserve Bank of India (RBI) has eased its mobile-banking norms, by raising the caps on fund transfers as well as mobile-based payments, and increasing the transaction limit to Rs 5,000 (US$ 100) per day for fund transfers.

Investment The booming domestic telecom market has been attracting huge amounts of investment, which is likely to accelerate with the entry of new players and launch of new services. Buoyed by the rapid surge in the subscriber base, huge investments are being made into this industry.

• Norway-based telecom operator Telenor has bought a 60 per cent stake in Unitech Wireless for US$ 1.23 billion.

• BSNL, India's leading telecom company in revenue terms, will put in about US$ 1.16 billion in its WiMax project.

• Vodafone Essar will invest US$ 6 billion over the next three years in a bid to increase its mobile subscriber base from 40 million at present to over 100 million.

• Telecom operator Aircel, which launched GSM mobile services in Bangalore in February 2009, plans to invest US$ 220.58 million over the next year to set up base stations across the state.

• The American Tower Corporation (ATC) has made an offer to acquire Aircel’s tower business, which has about 12,000 towers.

• Reliance Communications has signed a telecom infrastructure sharing agreement with S Tel, a new telecom operator. The deal, which covers telecom towers, transmission and fibre backbone, will be executed by RCom through its tower subsidiary, Reliance Infratel.

• Bharti Airtel will invest US$ 126.5 million to ramp up its networks in the Assam and Northeast circles in 2009-10.

• Etisalat DB Telecom India (erstwhile Swan Telecom) and Reliance Communications have entered into a long-term passive infrastructure sharing agreement worth over US$ 2.1 billion, spread over a period of ten years.

• Loop Mobile, formerly known as BPL Mobile plans to invest around US$ 75 million in its Mumbai operations.

Investments Abroad After the amazing growth story in the domestic market, Indian telecommunication companies are now set to have a major global footprint.

• The Bharti Group, which already has operations in Seychelles (begun over a decade ago) and in the Channel Islands in Europe, will be foraying into the Sri Lankan market. Bharti Airtel will launch 2G and 3G services with an initial investment of US$ 200 million.

• Reliance Communications will be launching its mobile services in Uganda by the end of 2008, with an investment of US$ 500 million. It also plans to foray into Sri Lanka. MTNL too has launched its services in Mauritius, after a wireless operation in Nepal as a joint venture.

• DTH company Spize TV (owned by Pyramid Saimira Group) has bought France Telecom’s European DTH operations called WorldTV Europe.

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India is emerging as a handset super-power as more manufacturers set up base in the country. It is not only the world’s fastest-growing telecom market, but it is also making remarkable progress in the telecom manufacturing space. Latest figures from the Department of Telecom (DoT) indicate that revenue from the telecom manufacturing sector is set to cross the US$ 6.5 billion mark in fiscal 2007-08. The Indian telecom equipment manufacturing sector is set to become one of the largest globally by 2010. Production in telecom equipment increased from US$ 4.25 billion in 2005-06 to US$ 5.64 billion in 2006-07 and estimated to be US$ 6.31 billion in 2007-08. Consequently, India is estimated to record highest growth in the Asia-Pacific region with a handset production of 51 million. Nokia reached production volume of 125 million in over two years of operations at its manufacturing unit in Tamil Nadu. Mobile phone production is estimated to grow at a CAGR of 28.3 per cent from 2006 to 2011, totalling 107 million handsets by 2010. Revenues are estimated to grow at a CAGR of 26.6 per cent from 2006 to 2011, touching US$ 13.6 billion. Simultaneously, India’s surging domestic market is also providing excellent investment opportunities in other segments of telecom equipment industry. For example, TRAI estimates that the country will need about 350,000 telecom towers by 2010, as against 125,000 in 2007. This has in turn attracted many leading global telecom equipment manufacturers to set up their base in India. • Nokia Siemens Networks (NSN) launched its new facility for the production and distribution of mobile

communications infrastructure at Oragadam near Chennai. • Nokia set up its manufacturing plant in Chennai. • Samsung has set up its GSM mobile manufacturing base in Manesar. • Motorola has established a manufacturing plant in Sriperumbedur. • Sony Ericsson has set up GSM Radio Base Station Manufacturing facility in Jaipur and R&D centre in

Chennai. • LG Electronics set up plant of manufacturing GSM mobile phones near Pune. LG Electronics has announced

that it will be further expanding its handset manufacturing facility in India. • Elcoteq has set up handset manufacturing facilities in Bangalore. • Elextronics has set up an SEZ in Chennai. Other major companies like Foxconn, Aspcomomp, and Solectron among others have decided to set up their manufacturing base in India. In 2007 alone, US$ 2 billion is expected to be made in the telecom manufacturing segment. Value Added Services Market India’s runaway success in mobile telephony has also given a boost to the mobile value added services (MVAS) market. According to a study by Stanford University and consulting firm BDA, the Indian MVAS is poised to touch US$ 926.3 million in 2007 and is likely to grow at a CAGR of 44 per cent to US$ 2.74 billion by 2010. Echoing similar sentiments, research firm Gartner estimates data services to account for 22 per cent of the total revenues by 2010 from 12 per cent in 2007. Significantly, India’s share in Asia-Pacific (excluding Japan) data revenue is estimated to almost double from about 6 per cent in 2007 to 11.5 percent by 2011.

Rural Telephony Rural India had 76.65 million fixed and Wireless in Local Loop (WLL) connections and 551,064 Village Public Telephones (VPT) as on September 2008. Therefore, 92 per cent of the villages in India have been covered by the VPTs. The target of 80 million rural connections by 2010 is likely to be met during 2008 itself. Universal Service Obligation (USO) subsidy support scheme is also being used for sharing wireless infrastructure in rural areas with around 18,000 towers by 2010.

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Network Ahead

As on October 17, 2008, there were 350 million mobile and fixed line subscribers in India, with 8 million subscribers being added each month. The Union Minister for Communications and Information Technology, Mr A Raja, has stated that the target for the 11th Plan period (2007-12) is 600 million phone connections with an investment of US$ 73 billion. Apart from the basic telephone service, there is an enormous potential for various value-added services. In fact, the real potential for telecom service growth is still lying untapped. The Indian rural market is going to be the next big thing for wireless telecom providers. With the tele-density in rural areas being still about 10 per cent against the national average of about 21 per cent, there seems to be huge untapped potential for mobile phone penetration in rural India. The government also plans an investment of US$ 2 billion, during 2008 to 2009, for the development of around 100,000 community service centres in rural India to provide broadband connectivity. Additionally, by 2010, the government targets:

• 80 million rural connections

• Mobile coverage of 90 per cent geographical area

• Internet Protocol Television (IPTV) in 600 towns

• Quadrupling manufacture

• Two-fold increase in telecom equipment R&D from the current level of 15 per cent. According to the CII Ernst & Young report titled ‘India 2012: Telecom growth continues’, revenue from India’s telecom services industry is projected to reach US$ 54 billion in 2012, as against US$ 31 billion in 2008. According to Mr Prashant Singhal, Telecom Industry Leader, Ernst & Young India, “Going forward, rural telephony, 3G, WiMax and data services will drive sector growth in 2012. The industry will witness sustained growth in mobile services and data revenues. Network expansion will continue in order to support the rural growth.”

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Chapter 4 – Social Sector Indices

A healthy, educated, and skilled workforce can contribute more significantly to economic development. Planned development includes ensuring human well-being through sustained improvement in the quality of life of the people, particularly the poor segments of the population. This requires emphasis on social sector development. Some of the main social sectors have been explained in this chapter. Some of the recent government initiatives in the social sector during 2007-08: 1. Aam Admi Bima Yojana Under a new scheme called “Aam Admi Bima Yojana” (AABY), launched on October 2, 2007, insurance to the head of the family of rural landless households in the country will be provided against natural death as well as accidental death and partial/permanent disability. The premium to be charged under the scheme is Rs. 200 per annum per member, 50 per cent of which is to be contributed by the Central Government and remaining by State Governments. In the first year of the Yojana, LIC to cover one crore landless households by September 30, 2008; Rs.1,500 crore placed with LIC; Additional sum of Rs.1,000 crore to be placed with LIC in 2008-09 to cover another one crore poor households in the second year. 2. Rashtriya Swasthya Bima Yojana The Rashtriya Swasthya Bima Yojana was formally launched on October 1, 2007 to be implemented with effect from April 1, 2008. All workers in the unorganized sector who come in the category of Below Poverty Line (BPL) and their families will be covered under the Scheme. The scheme also has a provision of smart card to be issued to the beneficiaries to enable cashless transaction for health care. Total sum insured would be Rs. 30,000 per family per annum with Government of India contributing 75 per cent of the annual estimated premium amount of Rs. 750 subject to a maximum of Rs. 565 per family per annum while State Governments are expected to contribute 25 per cent of the annual premium as well as any additional premium. The cost of smart card would also be borne by Central Government. 3. National Old Age Pension Scheme (NOAPS) Under the Scheme, the Central Government provides Rs. 200 per month of financial assistance per beneficiary. The eligibility criteria for NOAPS has been recently modified from “who is 65 years or above and a destitute” to one “who is 65 years and above and belonging to a household below the poverty line”. The Ministry of Rural Development administers the scheme. 4. Ujjawala Scheme for Prevention of Trafficking and Rescue, Rehabilitation and Reintegration of victims of trafficking for commercial sexual exploitation The Scheme was launched on December 4, 2007. It has five components namely, prevention, rescue, rehabilitation, reintegration, and repatriation. Progress on major initiatives already under implementation in the social sector 1. National Rural Employment Guarantee Scheme (NREGS) NREGS, which was launched on February 2, 2006, in 200 most backward districts in the first phase, has been expanded to 330 districts in the second phase. The remaining 266 districts have been notified on September 28, 2007 where the scheme was to come into effect from April 1, 2008. As against the employment demanded by 2.61 crore rural households, 2.57 households have been provided wage employment during 2007-08. Allocation under NREGS increased by 144 per cent to Rs.39,100 crore in B.E. 2009-10 over B.E. 2008-09. To increase productivity of assets and resources under NREGA, convergence with other schemes relating to agriculture, forests, water resources, land resources, rural roads initiated. In the first stage 115 pilot districts selected for convergence.

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2. Bharat Nirman This programme, which was launched in 2005-06 for building infrastructure and basic amenities in rural areas, has six components, viz. rural housing, irrigation potential, drinking water, rural roads, electrification, and rural telephony. Bharat Nirman has made impressive progress in 2007-08 with 290 habitations provided with drinking water each day, 17 habitations connected through all weather road, 52 villages provided telephones, 42 villages electrified & 4,113 rural houses completed each day.

• Allocation for Bharat Nirman increased by 45 per cent in 2009-10 over B.E. 2008-09. Allocations under Pradhan Mantri Gram Sadak Yojana (PMGSY) increased by 59 per cent over B.E. 2008-09 to Rs.12,000 crore in B.E. 2009-10. Under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), allocation increased by 27 per cent to Rs.7,000 crore.

• Allocation under Indira Awaas Yojana (IAY) increased by 63 per cent to Rs.8,800 crore in B.E. 2009-10. Allocation of Rs.2,000 crore made for Rural Housing Fund (RHF) in National Housing Bank (NHB) to boost the resource base of NHB for refinance operations in rural housing sector.

3. Mid-day Meal Scheme 11.4 crore children covered under Mid Day Meal Scheme, the largest school lunch programme in the world. This Scheme, which was launched in August 1995, is intended to give boost to universalization of primary education by increasing enrolment, retention, and attendance while contributing to the nutrition of students in primary classes. Extended to upper primary classes in Government and Government aided schools in all blocks which will benefit 2.5 crore children taking the total number of children covered under the scheme to 13.9 crore. 4. Rajiv Gandhi National Drinking Water Mission This programme was introduced as one of the five Societal Missions in 1986 and was called the National Drinking Water Mission. It was renamed as Rajiv Gandhi National Drinking Water Mission in 1991. 5. National Rural Health Mission The National Rural Health Mission was launched on April 12, 2005, to provide accessible, affordable, and accountable quality health services to the poorest households in the remotest rural regions. Allocation under National Rural Health Mission (NRHM) increased by Rs.2,057 crore over Interim B.E. 2009-10 of Rs.12,070 crore. 6. Jawaharlal Nehru National Urban Renewal Mission (JNNURM) JNNURM, which is for a seven-year period from 2005-06, has two main components – Basic Services to the Urban Poor (BSUP) Programme and Integrated Housing & Slum Development Programme (IHSDP). BSUP was launched to assist cities and towns in taking up housing and infrastructural facilities for the urban poor in 63 selected cities in the country. IHSDP, which was launched simultaneously with BSUP in December 2005, is taking up housing and slum upgradation programmes in non-BSUP cities. Allocation under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) stepped up by 87 per cent to Rs.12,887 crore in B.E. 2009-10 over B.E. 2008-09. Allocation for housing and provision of basic amenities to urban poor enhanced to Rs.3,973 crore in B.E. 2009-10. This includes provision for Rajiv Awas Yojana (RAY), a new scheme announced.

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4.1 LITERACY AND HIGHER EDUCATION IN INDIA History of Education after Independence

Year Details 1948-49 University Education Commission constituted

1950 India becomes a Republic. Free and compulsory education enshrined as one of the Directive Principles of State Policy in the new Constitution

1951 Decennial Census yields a Literacy Rate (5+) of 18.3% (overall), 8.9% (female) First Indian Institute of Technology (IIT) established at Kharagpur

1952-53 Secondary Education Commission constituted 1956 University Grants Commission (UGC) established by Act of Parliament

Indian Institute of Technology (Kharagpur) Act passed by Parliament Pandit Jawaharlal Nehru delivers the first convocation address at the first IIT (Kharagpur)

1958 Second IIT established at Mumbai

1959 Third and Fourth IITs established at Kanpur and Chennai, respectively

1961 NCERT established Institutes of Technology Act passed by Parliament to provide a common legal framework for all IITs First two Indian Institutes of Management (IIMs) set up at Ahmedabad and Kolkata

1963 Fifth IIT established at Delhi 1964-66 Education Commission constituted

1968 First National Policy on Education (NPE) adopted, in the light of the recommendations of the Education Commission

1973 Third IIM established at Bangalore

1975 Integrated Child Development Services (ICDS) Scheme launched to provide for holistic development of children up to the age of six years

1976 Constitution amended to change “Education” from being a “State” subject to a “Concurrent” one

1984 Fourth IIM established at Lucknow 1985 Indira Gandhi National Open University (IGNOU) established by an Act of


1986 New National Policy on Education (NPE) adopted

1987-88 Many large centrally-assisted schemes like “Operation Blackboard”, “Educational Technology”, “Vocationalisation of Secondary Education”, etc., launched in pursuance of NPE, 1986 All India Council of Technical Education (AICTE) vested with statutory status by an Act of Parliament National Literacy Mission launched

1992 NPE, 1986, revised, based on a review by the Acharya Ramamurti Committee

1993 National Council of Teacher Education (NCTE) vested with statutory status by an Act of Parliament

1994 District Primary Education Programme (DPEP) launched to universalize primary education in selected districts National Assessment and Accreditation Council (NAAC) established by UGC (with headquarters at Bangalore ) to assess and accredit institutions of higher education National Board of Accreditation (NAB) established by AICTE to periodically evaluate

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technical institutions and programmes Sixth IIT established at Guwahati

1995 Centrally-assisted Mid-Day Meal scheme launched in government and semi-government primary schools all over the country, with central assistance by way of free food grains

1996 Fifth IIM established at Kozhikode

1998 Sixth IIM established at Indore

2001 Decennial Census yields Literacy rate (7+) of 65.4% (overall), 53.7% (female) Sarva Shiksha Abhiyan (SSA) launched to universalize elementary education of good quality all over the country University of Roorkee converted into (the seventh) IIT

2002 Constitution amended to make Free and Compulsory Education, a Fundamental Right (yet to be brought into force)

2003 17 Regional Colleges of Engineering converted into National Institutes of Technology, fully funded by the Central Government

2004 Education Cess levied for raising additional finance needed to fulfill Government’s commitment to universalize quality basic education Mid-Day Meal scheme revised to provide central assistance to meet cooking cost as well as EDUSAT, a satellite dedicated to education

2005 National Commission for Minority Educational Institutions established by Act of Parliament

2005-06 Two Indian Institutes of Science Education & Research (IISERs) established at Kolkata and Pune, respectively

2006-07 Third Indian Institute of Science Education & Research (IISER) established at Mohali.

2007-08 Two more IISERs approved to be established at Bhopal and Thiruvanandapuram. The 20 NITs that were earlier being managed by individual registered societies brought under a common statutory framework through National Institute of Technology Act with effect from 15-08-07 Seventh IIM, namely RGIIM, has been established in Shillong. The Indian Institute of Information Technology, Design, and Manufacturing has been set up in Kanchipuram, Tamil Nadu. Proposal to set up 8 more IITs – three have been decided to be established at Bihar, Rajasthan, and Andhra Pradesh

2008-09 Out of the proposed 8 new IITs – the first one has been established in Rajasthan.

Growth of Education Sector: Liberalization and Globalization of the economy generates higher demand for new skills. Even though the number of universities and colleges of all types have increased, what now matters is the focus on providing quality education standards. As per the last available data pertaining to 2003-04 (unless otherwise stated) from the Ministry of HRD, there were over 1.18 million schools, 17,625 Colleges (2004-05), 338 Universities (as on 31-03-05), 6.2 million teachers and 224 million students. In absolute numbers, this seems a large number but does not cover adequately the prescribed age group under each category. With the universalisation of elementary education and the corresponding growth in secondary education, the demand on university education for greater access, would increase still further. Over the decades, literacy rates have shown a substantial improvement. The total literacy rate, which was only 18.33% in 1951 rose to 52.21% in 1991 and further increased to 65.4% in 2001. According to the census of India, 2001, the literacy rate has gone up to 75.85% of males and 54.16% of females. During the last decade,

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female literacy rate has shown much higher growth – It increased by 14.87% as against 11.72% for males thus decreasing the male female differential in literacy rates from 24.84% in 1991 to 21.7% in 2001. The National Literacy Mission (NLM) has been instrumental in improving the literacy rates. A sustainable threshold level of 75% literacy was set by NLM. The Adult Education program and Continuing Education program have also played a key role in eradicating illiteracy. Under these schemes, about 96.69 million people have been made literate by 31 March 2002 (Source: Economic Survey, 2002-03, Government of India) Age group: Elementary Education: 5-13 years Secondary/Senior Secondary: 14-18 years Technical/Professional Education (Tertiary): Above 18 years Elementary education has been given the highest priority in terms of allocation of resources and number of schemes launched because of the high drop out rates in school. This is significant as the drop out rates further affect the efficiency and enrolments at the Secondary/Senior Secondary and Tertiary Education level. The drop out rate has decreased during the years but is still very high. As of 2001, it was about 40% in primary level and about 53% in upper primary level. Some of the schemes launched by the Central Government to improve elementary education to meet the needs of the educationally disadvantaged:

• Operation blackboard

• District Primary Education Programme

• Education Guarantee Scheme

• Alternative & Innovative Education

• Teacher Education

• National Programme of Nutritional Support to Primary Education

• Sarva Shiksha Abhigyan

• Jawahar Navodaya Vidyalaya

• Kasturba Gandhi Balika Vidyalaya

• Mid Day Meal Scheme Secondary Education provides skilled manpower to the economy and is a bridge for higher, technical, and professional education. At Secondary education level – the Kendriya Vidyalaya manages 849 schools and Navodaya Kendriya Vidyalaya Samiti through 451 institutions predominantly in rural area (as on 31st December 2001) towards activities for extension of infrastructural facilities, introduction of vocational courses, and teachers training. Technical and Professional Education in the country has played a significant role in economic and technical development by producing quality Manpower. There were 229 Universities, 96 deemed Universities, and 13 institutes of national importance as on 31-03-2005, and these numbers have since then increased owing to increased need, some of the factors influencing Higher Education are

• Need to build self-reliant academic structure (to substitute import of knowledge)

• Demand for educated manpower to meet planned economic growth

• Pressure from those who were denied higher education for centuries

• Push factors – rapid expansion of school education, universalization of elementary education

• Need to upgrade educational qualifications to provide advantage in a situation of job-scarcity

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Some latest data available:

• The number of Elementary Schools (as per the data collected from 35 states) has increased from 1.03 million in 2004-05 to 1.19 million in 2006-07. The total enrolment in the same period has increased from 118.29 million to 131.85 million for class I-V and 37.71 million to 47.48 million for class VI-VIII. (Source: National University of Planning and Administration, New Delhi)

• The drop out rate at Elementary level has decreased from 52.8% in 2002-03 to 50.8% in 2004-05 and at Secondary level from 62.6% to 61.9% for the same period.

• The number of secondary and higher secondary schools has increased to 152049 in 2004-05. Total enrolments in secondary and higher secondary stage has increased to 37.1 million in 2004-05.

• Note: The difference in the drop out of students becomes more glaring at the secondary level and above. To address this, the government has decided to launch a Scheme for Universalization of Access to Secondary Education during the eleventh plan.

• As per the UGC report, the enrolments in the Higher and Technical Education have increased from 10.50 million in 2004-05 to 11.34 million in 2005-06. Out of this, the number of women students consisted of 40.39%.

Economic Systems and their implication for Education Sector: Education is a critical input for investment in human capital. As against the goal of 6% of GDP, the total expenditure on Education in India is only about 3.99% as of 2002. There may be a perfect positive correlation between economic conditions of a country and growth of education sector. This can be substantiated by the growing number of students from developing countries preferring to study in the developed countries. Trends in domestic trade, money supply, foreign exchange reserve, growth of industries, agriculture, and services sector etc. play a key factor in assessing the prospects of education in a country. Some key factors in improving higher education:

• Reduced Bank rates on loan for higher education to students wanting to pursue medical, engineering or management education.

• Liberalization of foreign exchange policies results in increase in foreign exchange reserves.

• Privatization of Education – Even though the cost of private education is comparatively high, it has improved the quality, curriculum, teaching methods, and infrastructure facilities.

• Globalization of Education by allowing International Educational institutions in India - an example to this is United States – where it is estimated to make profit of more than seven billion dollars a year by the sale of its educational services abroad.

Earlier, the economic thinking was inward looking, whereas a global outlook is a necessary condition of the present world market. Integration of education with different aspects of economic development has come to be accepted as the single most crucial factor that can give a market orientation and unique thrust to the educational system. Investment in Education is expected to commensurate gains. Globalization of Education Market: Challenges and Opportunities In WTO, the objective of General Agreement on Trade in Services was to establish a multilateral framework for services similar to trade in goods involving reduction in tariff and non-tariff barriers to trade. In the GATS scheduling guidelines, Education Services are classified into five categories and trade in these may be carried out under four modes of supply i.e.: Categories of Education Services:

• Primary Education Services

• Secondary Education Services

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• Higher Education Services

• Adult and Continuing Education Services

• Other Education Services Modes of Trade: • Cross-border Supply

• Consumption Abroad

• Commercial Presence

• Presence of Natural persons In the Education sector, 40 countries gave commitments for trade in Education under different modes of supply. For trade in Higher Education, only 17 countries gave commitments. Globalization will have its impact on the entire education system and more so in the higher education. WTO has posed both challenges and opportunities to the member nations. India’s need to make commitments in Education under WTO: From traditionalist’s viewpoint of education, as incorporated in the Joint Declaration on Higher Education and the GATS, it is clear that India should refrain from making any commitments in trade in educational services. Even though the government is the principal provider of higher education in the country, the contribution of the private sector is also significant, especially in professional education. Hence, India cannot take recourse to Article 1, 3 of GATS that allow exemption to services provided exclusively by the government without a commercial purpose and without any competition from private service suppliers. India, being a member of WTO, is committed to the progressive liberalization of trade in commercial services, including the education services. It has to identify, within the framework of GATS, its opportunities in the education sector, and particularly in higher education. It has also to recognize the inherent dangers in opening up the higher education sub-sector, and accordingly prepare its schedule of commitments with limitations. Some of the issues that need to be considered are given below: The potential of higher education services as an international trade With the incoming of the knowledge era, information and the ability to interpret information have assumed significance. It is estimated that for sustained national development, at least 20% of the population in the age group 18-24 should have the benefit of higher education as against the existing 6%. With the infrastructure for funding quality education from the national exchequer being deficient in most developing countries including India, the potential of higher education services as a trade is large. This potential has been realized by the developed countries and has made sustained efforts to export education. Australia, for example, has been promoting its education through the consumption abroad and commercial presence modes. The number of international students in Australia has increased tremendously in the last ten years from 47,000 to more than 2,00,000. It is estimated that International students in Australia have contributed A$ 3.2 billion of economic benefits to the Australian economy (According to Dr. Sheel Nuna, Australian Education International). India’s benefit from trading in Education services India has the second largest higher education system in the world. It is very well endowed in terms of both infrastructure and human resources. Admittedly, the quality of education imparted in the different academic institutions is variable. Yet, there are a number of institutions in India where the standard of education is comparable to the best in the world and where outstanding research is being conducted in key areas. Therefore, it can benefit both economically and politically by exporting education, especially to the developing countries that have a substantial Indian Diaspora.

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The disciplines that promise the most are:

• Engineering and technology (especially the ICT – Information, Communication, and Technology)

• Emerging sciences (like biotechnology and molecular biology)

• Performing arts and areas of study based on ancient knowledge (Ayurveda, Yoga) Another area that India can look to benefit from is the Training services and Educational Testing Services:

• Common Admission Test (CAT) conducted by the IIM

• Joint Entrance Examination (JEE) conducted by the IIT

• National Eligibility Test (NET) conducted by the UGC and CSIR

• Graduate Aptitude Test in Engineering (GATE)

• Pre-medical Tests (PMT)

• Pre-engineering Tests (PET) Precautions that need to be taken Keeping in view the national policies and priorities and considering the socio-economic divide and the high cost of private/international education, it is advisable that India should refrain from making commitments in all the sectors of Education. In case of higher education, it should be possible to make commitments with appropriate built in restrictions that could be sub-sector specific, nation specific and even specific to areas/regions of India. The restrictions could relate to the following:

• Free-movement of persons

• Immigration rules

• Nature of courses

• Modalities of repatriation of money

• Subsidies to local institutions

• Quality assurance mechanisms There is a need to prepare an exhaustive exercise that will identify:

• Areas and aspects where national treatment can be accorded to foreign providers

• Areas where market-access cannot be allowed to foreign providers

• Conditions and negotiating points for the recognition of degrees

• Subsidies that are essential for promotion of Indian education

• Safeguards for preserving national culture and ethos 4.2 CHILDREN LABOR Concern of children and the elimination of child labor continue to be an area of great concern and article of faith for successive governments. According to the census 2001 figures, there are 1.25 crore working children in the age group of 5-14 as compared to the total child population of 25.2 crore of which 1.07 crore working children are in the age group 10-14. Existing laws that prohibit child labor in India: Existing laws prohibit the employment of children below 14 years of age in factories, mines and hazardous employment, household and restaurants and eateries etc. and also regulate the working conditions of children in other non-hazardous areas of employment. The Government of India adopted a National Policy on Child Labor in 1987 with a three fold strategy: legal action plan, general developmental programs, and project based action plan. Some of the Child Protection Acts are:

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• Child Labor (Prohibition & Regulation) Act, 1986.

• The Factories Act, 1948.

• The Mines Act, 1952.

• The Motor Transport Worker’s Act, 1961.

• The Beedi and Cigar Workers (Conditions of Employment) Act, 1966.

• The Plantations Labor Act, 1951.

• The Minimum Wages Act, 1948. Data on child labor is collected from three sources which are as follows: 1. Population Census (PC): This is one of the major sources of data. It is conducted every ten years, the last being conducted in 2001. Population Census provides figures of the total population and working population by age groups including the age group 0-14 years. The total population is divided into workers and non-workers and the working population is further sub-divided by age of the workers. The distribution of the population and workers by age enables us to estimate the absolute numbers of working children and the percentage of working children in total children population aged between 0-14 years. 2. National Sample Survey (NSS): The National Sample Survey (NSS) is another important source on child labor. Unlike the Population Census which covers the entire population, the NSS are based on sample surveys. The National Sample Survey Organization (NSSO) carries out large scale surveys on the whole of India with sections on employment and unemployment every five years. The population in National Sample Survey is comprised of three components, that is: (a) workers (or employed) (b) seeking/available for work (or unemployment) and (c) not in labor force (or non-worker). 3. Rural Labor Enquiry (RLE): The third official source on child labor is “The Rural Labor Enquiry Survey (RLES)”. The data from RLE is generated from the National Sample Survey. Therefore, the period of RLES correspond with that of the NSS. However, the information in the Rural Labor Enquiry concerns only rural areas and rural labor households, unlike the Population Census and NSS, which provide data for both rural and urban areas. The RLE provides data on numbers of working children. The population of the children can be calculated by taking the average number of children per household (or household size) and the number of rural labor households. This enables us to calculate the percentage of working children to total population. The different aspects of data that can be derived from the above data sources are:

• Magnitude of Child Labor

• Sectoral participation or economic activities in which child labor participate

• Other aspects such as educational background, wages, and child migration etc. Reasons for Child Labor: Child labor in India is more of a rural than urban phenomenon. Approximately, 90 per cent of the working children in the rural areas are employed in agriculture and allied activities. The unorganized and informal sectors, both in urban and rural areas, account for almost the entire child labor force. The distribution of child labor in various States appears to indicate certain correlations:

• States having a larger population living below poverty line have a high incidence of child labor.

• High incidence of child labor is accompanied by high dropout rates in schools.

• The incidence of child labor is linked to the level of socio-economic development of an area, partly to the attitude and approach of parents of the child laborers as a result of socio-economic compulsions.

One frequently comes across dismal reports on the lives of working children, especially in highly exploitative and hazardous occupations. Some of the answers to the question ‘What leads to Child Labour’:

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• Poor family and less income leads to child labour. The child is forced to work and earn at a very lower age. It becomes a compulsion for them to work and earn livelihood for themselves and their families. Thus a child for the sake of his family is compelled to work in several places.

• Ignorance of parents towards education results in lack of education of child and he have no other options but to work and earn his livings.

• Children are found to be better producers of certain products such as knotted carpets and other such kinds of goods. Hence, these children are hired and exploited to work and produce such types of goods. This is known as “NIMBLE FINGER THEORY”.

• Discrimination on grounds including gender, race or religion also plays its part in why some children work at such tender age.

• Child trafficking is another cause of child labour. A number of children are bought and sold and are exploited to work as labourers, beggars, domestic workers, etc.

• In domestic matters, children can be made to work easily and at the low wage. Moreover, the masters can dominate them easily. Thus, the number of children working in households constitutes the major part of child labour.

Some of the Industries that employ Child Labor:

• Match factories

• Lock and brassware industry

• Diamond cutting jobs and gem polishing works

• Carpet weaving and beedi making jobs. Some of the Government initiatives: The Government has been alive to the need for release of these children from hazardous work and for their rehabilitation – physical, emotional, and economic- through education. With this end in view, the National Policy on Child Labor was formulated in August 1987. The National Child Labor projects were conceptualized and launched around the same time. Later on, this was reinforced and strengthened for the total liberation of all children in the age group of 5 to 14 employed in hazardous work and for their physical and emotional rehabilitation through a composite package under the National Child Labor Projects, which are to be administered by the District Child Labor Project Society registered under the Societies Registration Act, 1960. The Government intends to implement the policies and programmes for elimination of child labour in a more focused, integrated and convergent manner. The Government would be first making attempts to eliminate child labour from hazardous occupations and progressively move towards elimination of child labour in all other areas in the coming years. For the Tenth Plan period, the Planning Commission has allocated Rs.667.50 crore for child labour schemes. Under the scheme, 12 National Child Labor Projects (NCLP) were started in:

• Andhra Pradesh (Jaggampet and Markapur)

• Bihar (Zarwah)

• Madhya Pradesh (Mandsaur)

• Maharashtra (Thane)

• Orissa (Sambalpur)

• Rajasthan (Jaipur)

• Tamil Nadu (Sivakasi) and

• Uttar Pradesh (Varanasi-Mirzapur-Bhadoi, Moradabad, Aligarh, and Ferozabad) A major activity under the NCLP is: • The establishment of special schools to provide both non-formal and formal education

• Vocational training

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• Supplementary nutrition

• Stipend and health care to children withdrawn from employment. Some steps that help eliminate child labor:

• Increasing the incomes of parents by convergence of various development schemes is a pragmatic step.

• Proper coordination in the implementation of different programmes being run by various government departments has been established.

A number of innovative schemes have been initiated across the country for the uplift of children. Under the grants-in-schemes, voluntary agencies are being financially assisted to the extent of 75 per cent of the project cost for taking up welfare projects for working children. Indeed, poverty eradication combined with educational reforms to provide free or affordable access to quality education with an interesting, innovative, and job-oriented curriculum for all can effectively eliminate child labor once and for all. Global Trends of Child Labor: A report published by the International Programme on the Elimination of Child Labor (IPEC), as part of the International Labor Organization (ILO) has provided the following statistical data collected throughout the world between 2000 and 2004 for different category of children: Working children: The incidence of children’s work in the sense of economic activity declined among all major age groups. About one-sixth of the total child population—i.e. 191 million children aged 5-14 years—were involved in some kind of economic activity in 2004. In total, there were some 20 million fewer working children in this age group than there had been in 2000. Boys continue to be slightly more exposed to work than girls, especially in the older age groups. Child labor: Child labor, a more restricted category than “working children”, excludes all children working legally in accordance with ILO Conventions. The global number of child laborers aged 5-17 years declined by 28 million from 246 million in 2000 to 218 million in 2004. Significantly more boys than girls are exposed to child labor in the older, 12- to 14-year and 15- to 17-year age groups. Children in hazardous work: The number of children in this worst form of child labor (WFCL) dropped considerably, from an estimated 171 million in 2000 to 126 million in 2004. The decrease was particularly strong among children in the 5- to 14-year-old age group. Boys continue to be more involved in dangerous jobs than girls are. Sectoral distribution of working children: Much of children’s work is agricultural and rural in nature. We estimate that more than two-thirds (69 per cent) of all working children are involved in agriculture, compared to 22 per cent in services and 9 per cent in industry. Regional distribution of working children: The Asian-Pacific region continued to harbor the largest number of child workers, 122 million in total. It is followed by Sub-Saharan Africa (49.3 million) and Latin America and the Caribbean (5.7 million). Due to data gaps, there are no new estimates for the Middle East and North Africa and the group of industrialized countries. The number of child workers declined in Asia/Pacific and in Latin America and the Caribbean, but not in Sub-Saharan Africa. The decline in the Latin American/Caribbean region was most significant. From 2000 to 2004, the region’s number of child workers and its child activity rate dropped to about one third of their previous levels. In the Asian-Pacific region, there was a slight decrease both in relative and absolute terms. The number of economically active children was reduced by 5 million in the four-year period under review. The regional activity rate also fell. The picture in Sub-Saharan Africa is more mixed. While the number of child workers increased slightly, the incidence of work dropped by more than two percentage points.

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Chapter 5 – India’s Foreign Relations

INTRODUCTION India’s size, demographics, and strategic location give it a prominent voice in international affairs, and its growing industrial base, military strength, and scientific and technical capacity give it added weight. It collaborates closely with other developing countries on issues from trade to environmental protection. The end of the Cold War dramatically affected Indian foreign policy. India remains one of the leaders of the developing world, the Non Aligned Movement (NAM) and hosted the NAM Heads of State Summit in 1997. India seeks to strengthen its political and commercial ties with the United States, Japan, the European Union, Iran, China, and the Association of Southeast Asian Nations (ASEAN). India is an active member of the South Asian Association for Regional Cooperation (SAARC). India was one of the founding members of the UN and is an active member of several international organizations, most notably, the WTO, ADB, G8+5, East Asia Summit, and G20. India has actively participated in several UN Peacekeeping missions. It is one of the largest troop contributors to the UN including contribution of personnel to UN operations in Somalia, Cambodia, Mozambique, Kuwait, Bosnia, Angola, and El Salvador and others. India has always been an active member of the UN and now seeks permanent seat on the UN Security Council. 5.1 INDIA’S TRADE AND ECONOMIC POLICY

After independence in 1947 and until the beginning of the 1990s, India's trade policy was heavily influenced by the “Swadeshi” (self-sufficiency) mentality and the “licence raj” system of restrictions on production and imports. After the cold war period, Pakistan’s growing proximity with US prompted India to develop close ties with the Soviet Union and received extensive military support from it. Though India continues to have a very strong military relationship with Russia, Israel has emerged as India’s second largest military partner. India’s strong strategic partnership with the US reflects India’s balanced foreign policy. A first generation of reforms (1991-1996) - aimed at liberalizing trade - led to a reduction of import tariffs, elimination of quantitative restrictions, exchange rate reforms and deregulation of industry resulting in yearly growth rates of around 7% (compared with 3% before the reforms). A second generation of reforms was initiated in 1999 to address issues related to lack of competitiveness, poor infrastructure, and overregulation. Over the past few years, India has met an ambitious target of an annual growth rate of 8%. The Prime Minister, Dr Manmohan Singh, on August 15, 2009, in his address to the nation on its 63rd Independence Day, said that the Government will take every possible step to restore annual economic growth to 9 per cent. Further, the World Bank has projected an 8 per cent growth for India in 2010, which will make it the fastest-growing economy for the first time, overtaking China’s expected 7.7 per cent growth. 5.2 BILATERAL AND REGIONAL RELATIONS 1. With Pakistan The January 2004 SAARC summit marked a historic breakthrough, with India and Pakistan agreeing to resume a composite dialogue on all issues including Kashmir. There has been improvement on many economic, cultural, and political relations between the two nations since 2004, with occasional stand-offs. Until today, the insurgency and terrorist activities have remained a sore point in the dialogue process.


With the partition, came the problem of acceding of two provinces – Junagadh and Kashmir. Junagadh, with a majority Hindu population ruled by a Muslim, acceded to Pakistan but eventually became a part of India.

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Pakistan expected Kashmir, a Muslim majority state ruled by a Hindu Maharaja, to join Pakistan. Maharaja Hari Singh signed a standstill agreement with Pakistan (preserving status quo) without giving his decision. Based on rumors that Kashmir was being acceded to India, the Pakistani forces invaded Kashmir in September 1947. Being ill equipped and troubled by the deteriorating law and order situations, Maharaja Hari Singh sought India’s assistance. Since Kashmir was not under Indian Constitution, Indian Armed Forces intervention was barred. Desperate to take assistance, the Maharaja acceded Kashmir to India by signing Instrument of Accession. Since then, northwestern portion remains as Pakistan administered/occupied Kashmir.


Indo-Pakistani war (First Kashmir War) over the accession of Kashmir to India, which involved Azad Kashmir Forces and Pakistani Soldiers on one side and the Indian Army on the other.


Second Kashmir War took place following the failure of Operation Gibraltar, which was designed to invade Jammu and Kashmir. The five week war ended with the UN mandated ceasefire and subsequent issuance of Tashkent Declaration.

1966 Tashkent Declaration was signed in USSR by Indian Prime Minister Lal Bahadur Shastri and Pakistani President Muhammad Ayub Khan for peaceful resolution of problems.


In December 1971, Pakistan and India went to war, following a political crisis in East Pakistan and the flight of millions of Bengali refugees to India. The brief conflict left the situation largely unchanged in the west, where the two armies reached an impasse, but a decisive Indian victory in the east resulted in the creation of Bangladesh.


In July 1972, Indian Prime Minister Indira Gandhi and Pakistani President Zulfikar Ali Bhutto met in Shimla and signed an agreement by which India would return all personnel and captured territory in the west, and the two countries would settle their differences by peaceful means through bilateral negotiations.


Diplomatic and trade relations re-established.

1979 - 87

After the 1979 Soviet invasion of Afghanistan, new strains appeared in India-Pakistan relations; Pakistan supported the Afghan resistance, while India implicitly supported Soviet occupation. In the following 8 years, India voiced increasing concern over Pakistani arms purchases, U.S. military aid to Pakistan, and Pakistan’s nuclear weapons program.


In 1988, Prime Ministers Rajiv Gandhi and Benazir Bhutto concluded a pact not to attack each other’s nuclear facilities. Agreements on cultural exchanges and civil aviation also were initiated.


The Prime Ministers of India and Pakistan met twice, and the foreign secretaries conducted three rounds of talks. In June 1997, eight outstanding issues were identified for focusing bilateral talks. In September 1997, the talks broke down over the structure of how to deal with the issues of Kashmir and peace and security. Pakistan advocated that separate working groups treat each issue. India responded that the two issues be taken up along with six others on a simultaneous basis.

1998 Nuclear tests conducted in both the countries

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In February 1999, attempts to restart dialogue were made through the meeting of both the Prime Ministers in Lahore with the signing of three agreements. May 1999 – Peace process was stalled by the intrusion of Pakistani backed forces into India held territory near Kargil, which saw 3 months of intense fighting across the LOC between May and July 1999 that saw the eventual withdrawal by the Pakistani forces. October 1999 saw the military coup in Pakistan that overturned the Nawaz Sharif government.


In July 2001, Mr. Vajpayee and General Pervez Musharraf, leader of Pakistan after the coup, met in Agra, but talks ended after 2 days without result. Indian Parliament was allegedly attacked in December 2001 by militants of Pakistani origin, increasing tensions and cooling down of relations further.

2002 Increased insurgency in Jammu & Kashmir led to increased troop building by both the countries.

2003 Prime Minister Vajpayee’s April 2003 speech in Kashmir revived bilateral efforts to normalize relations, which saw increased confidence building measures including ceasefire measures.


Prime Minister Vajpayee and President Musharraf met on the sidelines of the January 2004 SAARC summit in Islamabad and agreed to commence a composite dialogue addressing outstanding issues between India and Pakistan, including Kashmir. In February 2004, India and Pakistan agreed to restart the '2+6' Composite Dialogue formula, which provides for talks on Peace and Security and Jammu and Kashmir, followed by technical and Secretary-level discussions on six other bilateral disputes: Siachen Glacier, Wuller Barrage/Tulbul Navigation Project, Sir Creek estuary, Terrorism and Drug Trafficking, Economic and Commercial cooperation, and the Promotion of Friendly Exchanges in various fields. The relations have since then normalized to most extent with improved economic, trade, and political relationship including: increased rail and road links, reduced Pakistani backed insurgency, decreased deployment of troops by both sides on the LOC, release of alleged Indian Spy in 2008 by Pakistan, India’s unilateral grant of ‘most favored nation’ status under WTO guidelines, and favorable resolution of tri-nation gas pipeline transit fee and many others.

2005 Following the October 2005 earthquake in Kashmir, the two governments coordinated relief efforts and opened access points along the Line-of-Control to allow relief supplies to flow from India to Pakistan and to allow Kashmiris from both sides to visit one another.

2006 The Foreign Secretary talks resumed in November 2006, after a three-month delay following the July 11, 2006 terrorist bombings in Mumbai.


The meeting generated modest progress, with the two sides agreeing to establish a joint mechanism on counter-terrorism and agreeing to a follow-on meeting in February 2007. The restart of the Composite Dialogue process is especially significant, given the almost six years that transpired since the two sides agreed to this formula in 1997-98.


Since Pakistani elections in February 2008 the Indian Minister of External Affairs and the Indian Foreign Secretary have met with their new counterparts to advance the Composite Dialogue talks, reaffirming a commitment to maintain the ceasefire along the Line-of-Control as well as increasing people-to-people connections through improving cross-border bus services. The Mumbai terrorist attacks in November 2008, however, have increased tensions between India and Pakistan.

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2. With Sri Lanka Sri Lanka is India’s coastal neighbour and hence is strategically very important for India. Peace and stability in Sri Lanka are important for India’s security concern. Historic Aspect

Year Details

1815 British got control over the Sri Lankan island. They started bringing in Tamil laborers from Southern India to work in tea, coffee, and coconut plantation.

1833 English was made an official language 1948 Sri Lanka gains full independence

1956 Sinhalese made sole official language and other measures introduced to promote Sinhalese and Buddhist feeling

1972 Buddhism given primary place as country’s religion

1976 LTTE formed as tensions increased in Tamil dominated areas of North and East

1985 First attempt at Peace talk between government and LTTE fails

1987 Indian Peacekeeping force deployed

2002 Government and Tamil Tiger rebels sign a permanent ceasefire agreement, paving the way for talks to end long running conflict.

2003 LTTE hands over proposals for an interim self governing authority for North-East

2004 Revolt by LTTE’s special commander Y. Murlitharan in the East and thus wages campaign against LTTE.

May 2005 Foreign affairs minister Lakshman Kadirgamar assassinated in Colombo

November 2005 Mahindra Rajapakse wins presidential elections

March-April 2006

April 2006

May 2006

LTTE pulls out of Geneva talks following differences on transportation of LTTE cadres between East and North. Sri Lankan Army chief Sarath Fonseka Survives attack by suspected LTTE suicide bomber; LTTE listed as terrorist organization by EU; freezes funds and bans fund-raising.

2006 – 2008 The attacks have continued; Even though there has not been a full scale war, the low-intensity conflict has continued.

January 2008 Sri Lankan government officially pulled out of the Ceasefire Agreement. This was followed by continued military actions. 2008 saw the Government launch a large-scale military offensive against LTTE controlled territory in the north.


In January 2009, government troops captured the towns of Mullaitivu and Kilinochchi, the LTTE’s military and administrative headquarters, and the strategic Elephant’s Pass, which links Jaffna peninsular to the rest of the island. By March 2009, the LTTE controlled a small area of jungle, and was surrounded by Government troops. Thousands of civilians are believed to be caught in intense fighting. International concerns have been raised about the safety of civilians and access by humanitarian organizations.

Difference between LTTE and Sinhalese Sinhalese form 85% of Sri Lankan population. Tamil – they are the ones who migrated from India and form the rest 15% of population. The Sri Lankan problem is a hangover of British colonial mischief in the sense the Sinhalese community appears to bear a grudge against the Tamils for having got ahead by collaborating with the British rule.

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One of the practical solutions touted probably lies in the devolution of power leading to the formation of federal state in which the legitimate aspirations of Tamil Community shall be constitutionally recognized. Mahindra Rajapakse of the united people’s Freedom Alliance (President of SL) is supported by JVP, JHP (two other parties in SL). The JVP and JHP are more influenced by Sinhalese nationalism and refuse to acknowledge the existence of an ethnic conflict. It sees entire issue of ethnic conflict as a terrorist problem that requires a military solution. It favors a military administrative unification of the country and thereafter a limited measure of power may be shared with the Tamils. JVP and JHU are opposed to the devolution of power and support a unitary constitution. The present SLFP (Sri Lankan Freedom Party) led government won the elections in Nov. 2005 on Sinhalese nationalist platform with JVP as a coalition. It promised that it would amend the CFA (Cease fire agreement) and start a new peace process. It is of the view that LTTE has been accorded unnecessary legitimacy and several concessions. LTTE, representing the Tamil nationalism, also does not favor federal state formation. It says it would negotiate for nothing else than a sovereign independent Tamil Elam consisting of Northern and Eastern Provinces of SL. In Sep. 2003, it presented a compromise formula that supports the establishment of Interim self governing authority (ISGA) for the North and Eastern provinces which was more of self rule. It supported confederation rather than federation. This difference in the conception of Sinhalese and Tamil nationalism has been the single most significant factor that has derailed the peace process so far. Geneva Talks SL Government and LTTE held a round of talks at Geneva in Feb ’06 with the help of Norway, Japan, US and EU. Both the parties agreed to respect and uphold the CFA and take all necessary action to ensure that there will be no intimidation and acts of violence. Both sides agreed to meet again at Geneva in April ’06, but the LTTE boycotted the talks. Water-war LTTE alleged that the blockade was imposed by the local community in protest against the failure of government to construct a promised water tank in the area. Norwegian envoys later succeed in persuading LTTE to lift the blockade conditionally. But government said deal was non-negotiable and continued military operation to finally get water-way out of control of LTTE in Aug. 2006. Recent Development

• Supreme Court in Oct – 2006 announced the de-merger of the Northern Jayawardene in 1987 as one administrative unit. This has further complicated the peace-talks.

• Second round of talks at Geneva in Oct-2006 ended inconclusively.

• Government closed the A-9 Route in Aug- 2006.

• EU has listed LTTE as terrorist organization. Has freezed funds and banned fund raising. Closure of A9 land route, the only trunk road to Jaffna from rest of Sri Lanka, in August has halted the flow of essential food provisions, and medical supplies to Jaffna Peninsula, and if urgent steps are not taken, the residents will face severe humanitarian crisis. Jaffna residents face malnutrition and imminent starvation; and the shortage of medical supplies and doctors has wreaked havoc with the peninsula's fragile health care system. Government Offensive in East and North Since December 2006, the Government has been taking offensive attack in the Eastern Province in Batticoala district. The loss of key posts of Vakarai and Gokatugolla and the strategic A5 highway by LTTE has been predicted to have cut-off supply routes to Northern tigers. The attack on the Northern province is primarily

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targeted at leadership of LTTE, which is said to have severely injured V. Prabhakaran, the leader of LTTE, and killed S.P. Tamilselvan and 5 others during November 2007. Further, Government declared a unilateral end to Ceasefire Agreement, which has seen increased operations from both the sides, increasing the fear of civilian targets that was earlier confined to military and political targets. Major areas of Co-operation with India

Trade & Commerce Comprehensive Economic, commercial, and cultural ties have been established through several regional and multilateral organizations such as the SAARC, South Asia Cooperative Environment Programme, South Asian Economic Union, SAFTA, and BIMSTEC. Bilateral agreements were signed in 2000, which has seen significant improvement in Indo-Sri Lankan export-import trade. Major co-operation has been in the field of Railways, Civil aviation, information technology and energy. Development Cooperation India has taken up various developmental cooperation activities in Sri Lanka in the field of Small Development Projects, Health Projects, and Education and Training projects. Projects are mostly implemented under ‘Aid to Sri Lanka’ funds. In 2006-07, the budget for the same was Rs. 28.2 crore. Defence India has provided Sri Lanka with two indigenously developed military radars to enable low-level detection of fighter aircraft. India had suspended the weapons supply in 2000 and Pakistan began taking interest in this area. So, India resumed its supply to take over Pakistan’s supply. India and Sri Lanka also held their joint naval exercises. Agriculture Indian council of Agricultural Research (ICAR) and the Sri Lanka council of Agricultural Research Policy (SLCARP) have signed a deal to promote and collaborate on research projects in areas like hybrid seed production technology and virus cleaning through tissue culture. Exchange Programme of Scientists of both the countries is also envisaged. India has also helped Sri Lanka to set up a bio reserves institute in which the rural youth from plantation sector shall be trained. LTTE as a threat to India

• Assassination of our PM Rajiv Gandhi.

• According to a home ministry report, LTTE has been targeting Pro-Indian Sri Lanka politicians and assassinating them.

What needs to be done and India’s role India and SLMN (Sri Lanka monitoring mission) have the SL government to put forward a set of proposals aimed at finding a political solution to the North-East conflict. Thereafter, President Rajapakse and UNP (Opposition party in SL) have signed a memorandum of understanding (MOU) to co-operate on key issues vital for the national well-being. MOU: (a) Eventual solution has to be political in character with power sharing within the country on a basis acceptable to Sinhala, Tamil, and Muslim for the benefit of the people at large. (b) Central government will be given all the powers, responsibilities, and functions necessary for effective conduct of national policy while other matters will fall within the preview of regional admin. (c) Monitoring mechanism has to be reviewed and made more effective.

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3. With Nepal: A Brief History

Year Details

1959 First democratic elections for a national assembly held, where Nepali Congress Party formed the government under the Prime Minister B.P. Koirala.

1960 King Mahendra dissolved democratic experiment

1962 King Mahendra carried out a royal coup, and declared party less panchayat system to govern Nepal and promulgated another new constitution that continued for more than next 30 years.

1972 King Birendra crowned

1990 After Popular uprisings – King Birendra establishes multiparty democracy and a constitutional monarchy.

1991 G.P. Koirala’s government formed

1996 Rise of Maoist’s demand for people’s democratic republic replacing the parliamentary monarchy.

2001 July 2001 August 2001 November 2001

King Birendra and his family member shot down by the crown prince Dipendra. Gyanendra, the brother of King Birendra, becomes the King. G.P. Koirala resigns and Sher Bahadur Deuba becomes the new PM. Talks between government and rebels begins Maoists want a new constitution Emergency declared by King Gyanendra

2004 King reinstates multiparty government February 2005 November 2005

King Gyanendra dismisses government and assumes absolute powers. Political parties from Seven Party alliance (SPA) were up against the king.

2006 New parliament formed in Nepal

2007 The ruling unicameral government and Maoists agree to abolish monarchy and declare Nepal a federal republic.

April 2008

Elections held – Maoists win by simple majority. In May, Constituent Assembly declared Nepal a Federal Democratic Republic, abolishing 240 years old monarchy. The motion for abolition of monarchy was carried by a huge majority; out of 564 members present in the assembly, 560 voted for the motion while 4 members voted against it.

June 2008 King Gyanendra leaves the Royal Palace.

July-August 2008

Ram Baran Yadav of the Nepali Congress became the first president of the Federal Democratic Republic of Nepal on July 23, 2008. Similarly, Pushpa Kamal Dahal, popularly known as Prachanda, of the Communist Party of Nepal (Maoist) was elected as the first Prime Minister on August 15, 2008, defeating Sher Bahadur Deuba of the Nepali Congress Party.

The royal coup of Feb-05 that lent a crushing blow to democracy in Nepal did not spell the end of democracy in that country, but marked the beginning of new movement for democracy. The political parties began regrouping their forces to ensure that multi-party democracy would finally triumph. They ware backed by the “Peoples’ power of Nepal.” It saw an agreement between the political parties and the Maoists, an unprecedented partnership of the two against the rule of King. The Maoists truce and reconciliation made it finally possible. King Gyanendra had to surrender and his powers were curtailed. A new parliament was sworn in on June 28, 2006.

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The Maoists and the leader of the SPA, G.P. Koirala signed a historic agreement to create an interim constitution, to hold new constituent assembly elections and monitor the arms of the state and rebels. The agreement was a significant victory for Nepal as a growing democratic country as the Maoists have been revolting for a decade unleashing violence that killed thousands and disrupted the democratic political process. Indo-Nepal Relations India’s role in Nepal in the recent years (Recent Nepal Crisis) India sent Dr. Karan Singh as PM’s special envoy to restore democracy in Nepal. He urged King Gyanendra to hand over the executive powers to a multi-party government. Later Mr. Sitaram Yechuri, CPI(M) leader from India, also made several trips to Nepal and met Maoists leaders and played an important role in getting them to the negotiating table with the other political leaders. India played a restrained role in the pre-democracy agitation. India came openly against the King Gyanendra’s dissolution of Parliament and declaration of emergency. It encouraged the negotiations between Maoists and the other political leaders. India dropped its ‘twin pillar’ policy towards Nepal. Twin pillar policy saw monarchy as well as political parties important for stability of Nepal. However, with the growing discontent of people against King, India supported the democracy led by political parties. But, India might have to play a greater role in securing peace and stability in Nepal. This is so because Nepal lies in between India and China and Security concerns for Nepal is a great concern for India. A healthy institution must be there in Nepal for it to be stable and progressive. India provides access to Nepal’s trade with outside world through the Indo-Nepal border. It provides a huge market for Nepal. Indo-Nepal Transit Treaty 2006

• It was renewed in Apr ’06 and will be valid for 7 years.

• It allows Nepal to trade with outside world through 15 transit points across Indo-Nepal border.

• Nepal is surrounded on 3 sides by India and 90% of its trade is with India. So this treaty is regarded as life time of Nepal.

• It allows Nepali goods from the part of Nepal to another via Indian Territory if a need arises due to natural disaster.

• Nepal has been allowed to trade with Bangladesh through 3 transit points. Nepal as transit point between India and China In Dec ’05, King Gyanendra declared that Nepal would be the transit point between India and China. The distance between Sino-India and Nepal-India border is less than 350 km. Nathula pass that links Sikkim and Tibet has limited trading potential, but the trade line through Nepal will connect the main land of India with China. The existing Arunachal Pradesh and Laddakh routes are disputed ones. The Kathmandu and Kodari route (Existing) and Kathmandu and Rasura route (Proposed) are attractive options in Sino-India trade. India’s role towards Nepal India might have to put an end to the arms embargo as this could help in curtailing the role of China and Pakistan. A comprehensive economic package may be given to Nepal to bail out of its economic crisis. India could take a lead in the disarmament programme in Nepal and stick to its Monroe Doctrine. Monroe Doctrine The main emphasis of this policy is to keep the foreign powers away from the affairs of Agra.

• The presence of external powers is not good for India (in Indian subcontinent)

• Strong military presence of US-led coalition in Afghanistan

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• Norway’s mediations efforts in Sri Lanka

• Defence Co-operation between Bangladesh and China

• Interference of US in Kashmir issue Monroe doctrine has declined due to:

• Globalization and integration of work market

• Neighboring countries of India not being able to keep hold of rebels

• Sri-Lanka failed to contain LTTE

• Afghanistan failed to check Taliban

• Nepal government failed against Maoists

• Bangladesh could not control the growing fundamentalists. India had good terms with the government and so rebels thought India to be its enemy.

• Importance granted by Indian diplomacy to Pakistan (some nations being neglected) What India can do?

• It can work to strengthen the economic integration of the nation and encourage trade so that its presence can be felt in this region.

• India might consider starting supply of the arms to Nepal so that the role of Pakistan and China may be curtailed.

• India could play an active role in resolving the regional conflicts by taking adequate interest in solving the issues so that India may have a presence in the mindset of people of these regions.

4. With Iran

Historic relations:

• Friendly relation for last 3500 years.

• Buddhism influenced eastern Iran in early days.

• Persian language – later mughals. In Present Context:

• Iran wants to bolster its Defence programmes air, naval programmes

• India is in need of oil

• Iran – nuclear issue

• Tri-nation pipeline project Gas – Pipe line Issue India had initially stated that it would not enter into any agreement with Pakistan, but with the change in regime in Pakistan, India is likely to enter into ‘trilateral agreement’ and resolve the transit fee issue with Pakistan. Can India rely on Iran? Iran withdrew its offer to IOCL to revamp Tehran and Tabriz refineries almost 3 years ago after IOCL failed to tie up its financing on Iranian terms. GAIL’s project to set up one million tonne petrochemical project at Assalyeh with Iran’s National Petrochemical Company has been pending since 2005. Iran’s controversial Nuclear Programme Since Dec-2002, U.S has been accusing Iran of being engaged in developing nuclear weapon in violation of NPT (Nuclear Proliferation Treaty). Iran is accused of having received the centrifuge system from A.Q. Khan of Pakistan.

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In Nov-2003, IAEA stated that Iran had weapon grade uranium, but it did not have any evidence. Iran Claims that its nuclear programme is totally peaceful and is being developed for power generation. As a member of NPT, it is entitled to develop its Uranium enrichment technology for purpose that is peaceful under international inspection for which it has signed the additional protocol with IAEA. EU-US stand – the way Iran has acquired the technology proves its purpose. Once it masters the technology for enrichment, Iran can use the same for nuclear weapons. U.S suspects that Iran wants to regain its supremacy in W. Asia and thereby disturb the peace by acquiring the enrichment technology. Thus, it may go against the US-Israel interest in the region. IAEA – Feb 06, IAEA passed 2nd resolution recommending for referring Iran’s Issue to United Nation Security Council for violating its obligations. Security Council: SC adopted a resolution requiring Iran to suspend all activities to Uranium enrichment or risk sanctions. India’s stand – India is not against the programme provided it is for peaceful process. Iran pursuing its enrichment programme has raised question, as published in Dec. 2002. It procured the technology from Pakistan in violation of NPT. So, there is a lack of confidence that the programme is meant for peaceful purpose. India has passed Weapon for mass destruction resolution and so, as a responsible nuclear weapon state, it might not support Iran’s policy. In terms of strategic interest, India might not want to have a nuclearized Iran in its neighborhood. It may disturb peace in W. Asia and Indian economy, if used for military purpose. Current leadership in Iran has stated categorically that it may not hesitate in sharing its nuclear knowledge with Islamic countries and if it falls into hands of International terrorists, this might prove detrimental for India. Energy Security (a) Present Scenario At present, oil and gas account for 45% of national energy basket and in rest 2 decades, it shall rise to 50%. Worrying trend is the growing dependence on imported crude oil to meet our requirements which is at present 75% and the expenditure is near Rs. 1,17,000 crores (2004-05). It is projected to increase to 85% or more over the next 2 decades. At the present rate of consumption, coal reserves could deplete in next 60 years and oil reserves in next 20-25 years, in the absence of other alternatives. Present per capita energy consumption is 486 KGOE (kg of oil equivalent) compared to world average 1659 KGOE (kg of equivalent) and it constitutes 3% of the world’s total energy consumption. With the Indian economy growing at a faster rate, energy needs will surely increase a lot. By 2010, India shall emerge as the 4th largest consumer of energy after US, China, Japan. (b) Steps to achieve energy security India needs to look at all the parts of world for diversifying its oil sources. Strategic partnership with Russia, Kazakhstan is now being strengthened. ONGC videsh is investing in Sakhalin I and Sakhalin II projects. Efforts are going on for collaborating with Egypt so that a pipeline could be laid from the Mediterranean Sea to the Red Sea. It would make feasible for India to harness even the reserves of Northern and Western Africa. Strategies are being made to rope in Turkmenistan, which has ample gas resources. The area surrounding Black Sea and Caspian Sea have vast oil reserves and they need to be tapped with the key of Russia.

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GAIL has brokered agreement with Burma for a gas pipeline to India. Similarly, MOU with Mauritius has been signed. (c) Other Steps A recent analysis says nearly 95% of all the oil in the world has already been discovered. So apart from acquisition of hydrocarbon based fuel, some other alternate must be searched for. Power generation through nuclear feed is 3%, which has to increase to 15-20%. We have significant coal reserves. But, the resources are not optimally utilized. So, there might be a good improvement if thrown open to private sectors. All renewable sources of Energy must be harnessed - wind, tidal, solar energy – with help taken from IIT, IISC, IIM’s. Generation of biofuels also needs to be pursued.


1. With China Despite suspicions remaining from a 1962 border conflict between India and China and continuing territorial / boundary disputes, Sino-Indian relations have improved gradually since 1988. Both countries have sought to reduce tensions along the frontier, expand trade and cultural ties, and normalize relations. A series of high-level visits between the two nations has helped to improve relations. In December 1996, Chinese President Jiang Zemin visited India on a tour of South Asia. While in New Delhi, he signed, with the Indian Prime Minister, a series of confidence-building measures along the disputed border, including troop reductions and weapons limitations. Sino-Indian relations received a setback in May 1998 when India justified its nuclear tests by citing potential threats from China. These accusations followed criticism of Chinese aggressive actions in Pakistan and Burma by Indian Defence Minister George Fernandes. However, in June 1999, during Kargil crisis, External Affairs Minister Jaswant Singh visited Beijing and stated that India did not consider China a threat. Relations between India and China are on the mend, and the two sides handled the move from Tibet to India of the Karmapa Lama in January 2000 with delicacy and tact. Continuing the trend of friendly relations, Chinese Premier Wen Jiabao invited Prime Minister Vajpayee to visit China in June 2003. The year 2003 ushered in a marked improvement in Sino-Indian relations following Indian Prime Minister Atal Bihari Vajpayee's landmark June 2003 visit to China. China officially recognized Indian sovereignty over Sikkim as the two nations moved toward resolving their border disputes. 2004 also witnessed a gradual improvement in the international area when the two countries proposed opening up the Nathula and Jelepla Passes in Sikkim, which would be mutually beneficial to both countries. The year 2004 was a milestone in Sino-Indian bilateral trade, surpassing the $10 billion mark for the first time. In April 2005, Chinese Premier Wen Jiabao visited Bangalore to push for increased Sino-Indian cooperation in high-tech industries. The high-level visit was also expected to produce several agreements to deepen political, cultural, and economic ties between the two nations. China’s stand on India gaining a permanent seat in the UN Security Council became neutral and India remained reluctant on China being granted permanent membership in the SAARC, which granted China an observer status during the SAARC Summit in 2005. A very important dimension of the evolving Sino-Indian relationship is based on the energy requirements of their industrial expansion and their readiness to proactively secure them by investing in the oilfields abroad - in Africa, the Middle East and Central Asia. This cooperation was sealed in Beijing on January 12, 2006 during the visit of Petroleum and Natural Gas Minister Mani Shankar Aiyar, who signed an agreement, which envisages ONGC

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Videsh Ltd (OVL) and the China National Petroleum Corporation (CNPC) placing joint bids for promising projects elsewhere – an agreement that has important consequences for the bilateral relations. In July 2006, China and India re-opened Nathula, an ancient trade route, which was part of the Silk Road. Nathula is a pass through the Himalayas, and it was closed 44 years prior to 2006 when the Sino-Indian War broke out in 1962. The initial agreement for the re-opening of the trade route was reached in 2003, and a final agreement was formalized in 2006. Disagreement over China’s occupation in Kashmir and China’s claim over whole of the State of Arunachal Pradesh remains unresolved. In January 2008, the Prime Minister of India, Dr. Manmohan Singh, visited China and met the Chinese Premier, Wen Jiabao, and President of China, Hu Jintao, and had bilateral discussions related to trade, commerce, defence, military, and various other issues. In July 2008, at the 34th G8 Meeting in Japan, Manmohan Singh and Hu Jintao had a friendly meeting. In the Sichuan Earthquake of 2008, India also sent a lot of help, in terms of money, and other items to help the Earthquake victims. In 2009 China also tried to block a loan from Asian Development Bank to India for the development of Arunachal Pradesh and when India succeeded in securing the loan with the help of USA and Japan, China expressed displeasure at ADB. Strategic Trade Developments between India and China Trade has been the vital part of the strengthening bilateral economic relationship between the two countries. China has emerged as India's largest trading partner, replacing US in 2008-09. According to a reply filed by Mr Jyotiraditya Scindia, Minister of State for Commerce and Industry, in the Lok Sabha on July 27, 2009, bilateral trade engagement between India and China stood at US$ 33.77 billion in April to February 2008-09, an increase of nearly 7 per cent over US$ 31.6 billion in the year ago period. According to data available with the Union Ministry of Commerce and Industry, imports from China expanded 28 per cent and stood at US$ 26.5 billion in April to February period of 2008-09. India’s major exports to China include ores, cotton yarn and fabric, organic and inorganic chemicals, precious stones, metals and machinery, while the items of imports from China include electrical machinery, organic chemicals, iron and steel, fertilisers and mineral fuel. India's exports to China, likewise, have grown nearly ten-fold – from 1.87 per cent of total exports in 2000-01, to 6.56 per cent of total exports in 2006-07. The growth continued in 2007-08, with exports to China touching US$ 7868.6 million during April-January 2007–08 – as against US$ 6572.8 million in the same period last fiscal. Significant exports from India to China include cotton, organic chemicals, iron, steel and inorganic chemicals among others. Further, China has emerged as the largest source of India's imports in the last two years. India's imports from China almost doubled to US$ 24.16 billion in April-December 2008-09 from US$ 12.64 billion in the comparable period of 2006-07, according to the Reserve Bank of India (RBI). On the other hand, imports from China are highest in the category of electrical machinery and equipment, organic chemicals, mineral fuels, oil and oil products. In fact, this surge in bilateral trade between the two countries has resulted in China displacing US to become the number one trade partner of India. This is no mean achievement, considering the fact that, bilateral trade between India and China was only about one-fourth of Indo-US trade in 2001-02. Further, to cement the rapidly strengthening bilateral trade ties, both countries are planning to sign a Free Trade Area agreement at the earliest. India's growing consumer market, skilled human resources, and software excellence together with China's own large market, its manufacturing prowess and cost competitiveness provide a strong platform for exponential growth of bilateral economic ties.

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Recently, China has decided to impose a 9 per cent rebate on steel exports which is likely to increase the flow of cheaper grades of steel into India. China's move has raised hopes among domestic steel companies seeking a 20 per cent import duty on all grades steel in the forthcoming budget. 2. With Japan India’s relation with Japan has not been in major limelight as the other major relations such as US, Russia, and China. Yet, Japan is India’s largest aid donor since 1986. Historical perspective Exchange between Japan and India is said to have begun in the 6th century when Buddhism was introduced to Japan. Indian culture, filtered through Buddhism, has had a great impact on Japanese culture, and this is the source of the Japanese people's sense of closeness to India. Japan and India signed a peace treaty and established diplomatic relations on 28th April, 1952. This treaty was one of the first treaties Japan signed after the World War II. After World War II, in 1949, Indian Prime Minister Jawaharlal Nehru donated two Indian elephants to the Ueno Zoo in Tokyo. This gesture was welcomed by Japanese, who had not recovered from the war. Some even say that Indira, the elephant in the Tokyo Zoo, had more coverage in Japanese newspaper than Indira, the Prime Minister of India. Ever since the establishment of diplomatic relations, the two countries have enjoyed cordial relations. In the post World War II period, India's iron ore helped a great deal in Japan's recovery from the devastation. Following Japanese Prime Minister Nobusuke Kishi's visit to India in 1957, Japan started providing yen loans to India in 1958. Bilateral Treaties and Agreements Bilaterally, there have been many treaties that have been signed and which are likely to increase and include many others.

• Treaty of Peace (1952)

• Agreement for Air Service (1956)

• Cultural Agreement (1957)

• Agreement of Commerce (1958)

• Convention for the Avoidance of Double Taxation (1960)

• Agreement on Cooperation in the field of Science and Technology (1985) However, India and Japan were not in close relations. The relations started changing under the Narasimha Rao’s government. Yet, both India and Japan had not considered each other as strategic partners. India considered Japan mostly as US follower (Japan being one of the military allies of US) and Japan considered India mostly dysfunctional, poor country. Japan’s relation with India was more or less relegated to a substantial aid donor. India’s nuclear program in 1998 marked one of the lowest bilateral relations between the two countries with Japan suspending all political exchanges and critical condemnation of India’s nuclear test; even economic assistance was frozen for three years. The year 2000 saw a breakthrough in the relationship. Japan and India agreed to establish “Japan-India Global Partnership in the 21st Century” when Prime Minister Mori visited India in August, 2000. In December 2001, Prime Minister Vajpayee visited Japan, and both Prime Ministers issued “Japan-India Joint Declaration”, which consisted of high-level dialogue, exchange in ICT field, joint counter-action against proliferation of WMD and terrorism. A Security Dialogue between the two countries was set up in 2001 and four rounds of dialogue have been conducted since then.

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In April, 2005, Prime Minister Koizumi visited India and agreed with Indian Prime Minister, Dr. Manmohan Singh, to reinforce the strategic focus of the global partnership between the two countries. They signed Joint Statement “Japan-India Partnership in the New Asian Era: Strategic Orientation of Japan-India Global Partnership” In December 2006, Prime Minister Singh visited Japan and had summit talks with Prime Minister Abe. The two Prime Ministers decided to establish a Strategic and Global Partnership between the two countries and signed the “Joint Statement towards Japan-India Strategic and Global Partnership”. Indian applicants were welcomed in 2006 to the JET Program, starting with just one slot available in 2006 and 41 in 2007. In August 2007, Prime Minister Abe visited India and had summit talks with Prime Minister Singh. The two Prime Ministers signed the “Joint Statement on the Roadmap for New Dimensions to the Strategic and Global Partnership between Japan and India” and “Joint Statement by Japan and the Republic of India on the Enhancement of Cooperation on Environmental Protection and Energy Security” after the summit talks. The two nations announced 2007 as Japan-India Friendship Year, and held cultural events in both India and Japan. This period, from 2001 – 2007, saw the gradual and steady upgradation of relationship from the level of friendship to India becoming a country for strategic partnership, which included improvement on three fronts, namely Political, Economic, and Strategic. The two nations have frequently held joint military exercises and cooperate on technology. India and Japan concluded a security pact on October 22, 2008. Main Elements of “Joint Statement towards Japan-India Strategic and Global Partnership”

• Holding annual Summit-level meetings in respective capitals

• Institutionalization of Strategic Dialogue at the Foreign Ministers level

• Launching negotiations for the conclusion of a bilateral EPA/CEPA

• Setting up of a Business Leaders' Forum

• Cooperation in the field of Science and Technology

• Expansion of youth exchange, promoting Japanese language education in India, etc.

• Cooperation in multilateral framework such as EAS, UN, SAARC, etc.

• Cooperation in the field of energy, environment, anti-piracy, non-proliferation, etc.

• Cooperation in Security Fields Apart from the above bilateral, economic, and regional cooperation, both the country’s common goal, which has been referred to in the joint statement of December 2005, is to join the UNSC as permanent members. Japan India Trade Relations: With growing economic strength, India has adapted its foreign policy to increase its global influence. Significantly, the year 2007 – ascribed as the Indo-Japan Friendship Year – saw the two countries enhancing their individual profiles even as the bilateral economic relationship touched new heights. According to a recent survey conducted by the Japan Bank for International Cooperation (JBIC) covering 620 Japanese manufacturing companies for the year 2008, India remains the second favourite investment destination for Japanese companies after China. More Japanese companies are looking at India and other emerging countries favourably, according to Mr Susumu Ushida, Senior Economist with Tokyo-based JBIC Research Institute. Japan ranked sixth in terms of cumulative foreign direct investment (FDI) in India worth US$ 3,047 million in April 2000 to July 2009, of which US$ 517 million came in the period April-July 2009, according to the latest data released by the Department of Policy and Promotion (DIPP).The Indian Advantage:

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• Japanese SMEs have begun to discover India as the new growth market. India is now a significant blip on the Japanese investor's radar.

• India's competence in the information technology sector lends synergy to Japan's excellence in the hardware sector.

• India's abundance of raw-materials and minerals matches well with Japan's capabilities in technology and capital to produce knowledge intensive manufactured goods.

• India is used as the human capital mine as the number of people entering the workforce has increased.

• India's large domestic market has been the main factor for investments by Japanese companies.

• Japan's FDI is concentrated largely in two major sectors of the Indian industry: automotive industry (60 per cent) and petrochemicals (20 per cent).

Exports and Imports: Apart from the growing official development assistance, bilateral trades in the form of Export and Imports are steadily increasing. While Japan ranks 10th among India's export destinations, India stands 26th among Japan's export destinations. India’s exports to Japan in the period 2007-08 stood at US$ 3.1 billion while imports totalled US$ 5 billion. Exports: Japan is the largest importer of Indian shrimps whereas Indian mangoes are also gaining huge popularity in Japan. India's exports to Japan comprise mostly of raw material and minerals such as marine products, minerals, and iron ore. Other items exported to Japan include:

• Agricultural products

• Handicrafts

• Cotton

• Carpets

• Leather garments and goods,

• Fresh Fruits/Juices and dried fruits

• Spices and Herbs

Imports: India's imports from Japan have been on the rise due to the huge increase in the import volume of each of the major commodities, like:

• Heavy machines

• Transport equipments.

• Electronic gadgets and spares

• Pharmaceutical products,

• Biotechnological products,

• Toys

• Gaming systems

FDI and FII FDI Japan ranks sixth in terms of cumulative FDI equity inflow into India. Some of the Japanese companies that have shown interest in FDI projects in the recent time include:

• Honda into the compact car segment, expansion of its dealership network, and production capacity.

• Maruti Suzuki India Ltd (MSIL) mostly in research and development (R&D), warehousing, marketing, logistics and design, and production and sales.

• Canon, Japan's digital imaging technology giant, is set to roll out its global flagship stores.

• Toyota, another Japanese car major, is considering scaling its investments and capacity in the country by making India an export hub for their small car. Toyota has set up a plant in south India to produce compact, low-priced cars by 2010.

• Other companies which have entered the Indian market are Japan's second-largest lender Mizuho Financial Group, Nissan, Toshiba Corporation, Zentek Technologies, and Mitsubishi-UFJ Securities.

FII India’s popularity with Japanese investors has progressively increased. An example of this is the increasing number of launch of New India Retail Funds.

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Although Japanese foreign institutional investors (FIIs) in India are still negligible, it is significant that 8 of the 11 registered with the Securities and Exchange Board of India (SEBI) have entered in the past year and a half. According to investment bankers, India may witness US$ 20 billion worth of Japanese investment in the next three years. After the first ‘India Investment Funds’ was set up in 2004, the number of such funds has doubled from 8 in November 2005 to 16 as of March 2007 with net assets worth US$ 8.2 billion. In fact, the Nomura Asset Management Co. Ltd. in Tokyo had to close its India fund just a day after its launch on June 22 because it collected more money than it could invest without artificially shooting up Indian stock prices. Such has been the growth in Japanese investment in India that much of the US$ 1.9 billion foreign institutional investment inflow in July came from Japan alone. Way Ahead Japan has generated a keen interest in Indian technology and the country’s educational system. Both the governments are also working on setting up an Indian Institute of Technology (IIT) with the involvement of Government of Japan. Moreover, India and Japan have set up two important forums – namely, High Level Policy Dialogue on Economic Development and India-Japan Strategic Dialogue on Economic Issues – to discuss all important economic issues. Both these dialogues are to be held annually now. And both countries have also agreed to have a Bilateral Currency Swap Agreement to meet any short-term liquidity crisis. This agreement marks a major step in strengthening the economic relations between two countries. A strong partnership between the two strongest democracies in Asia will not only benefit both countries but also revolutionize Asia at large, providing the balance to the hegemonic ambitions of China in both commerce and politics. According to industry body, Confederation of Indian Industry (CII), India-Japan trade can reach US$ 15 billion by 2010, if issues like trade facilitation and non-tariff barriers are addressed. Possible Roadblocks Even though the joint statements provide an optimistic outlook, there could be likely roadblocks that might impede the growing relations. Some of them could be:

• India’s economic procedures are still a formidable barrier to Japanese investors.

• Japanese constitutional changes such as the initiative launched to amend the Article 9, possession of armed forces like any other sovereign country, can be achieved but soon are open to speculation.

• Japan’s alliance with the US may become a contentious issue especially with the left partners of the government.

• The China factor – Japan views growing Chinese dominance, escalating military budget, growing maritime presence in the Pacific and Indian Oceans, reluctance to settle the Senkaku Islands dispute, claims to Exclusive Economic Zone in the East China Sea as threat and do not want China to emerge as hegemonic power in the region. Yet, Japan and China are each other’s principal economic partner. On the other hand, Indian government has not described China as a threat officially and China continues to remain a subject of common strategic interest to both the countries. If either country drifts towards a state of conflict with China, the response of the other is unpredictable.

• The US Factor - It is important to bear in mind that while Japan is a military ally of the US, India is a strategic partner. Should the requirements of an alliance force Japan to support a certain course of US foreign and security policy arise, India will not feel bound to do the same.

3. With United States of America A brief History: The Indo-US relationship can be broadly classified under the following: Post-Independence / Cold War Era: Post independence, India followed an even handed economic and military relationship policy, where it declined to be a part of any major bloc and refrained from being a part of any military

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alliance. U.S.’s growing relation with Pakistan forced India to develop bilateral military relationship with the Soviet Union. These factors strained the Indo-US relations. Post Cold war / Pokhran Test II: Post cold war period saw an upswing of relations owing to both countries being democracies and having growing trade relationship. Again during the Gulf war, India went through a difficult phase and went through the liberalization of the economy. Further disintegration of the former Soviet Union had major repercussions. India started looking for strategic new allies and tried to improve relations with the NATO countries, especially the US. In the mid 1990’s, India drew the attention of International community’s attention on the increasing Pakistan backed insurgency and terrorism in the Kashmir Valley. Kargil War paved the way to a major diplomatic victory, which also saw many Anti-India terrorist outfits based in Pakistan being named terrorist groups by the US. Yet, Pokhran II saw severe economic sanctions and strained bilateral relations. The Non-Proliferation dialogue, initiated after the 1998 nuclear tests, has bridged many of the gaps in understanding between the countries. Post 9/11 Attack: Post the September 11 attack, Indian Intelligence support to the US, extensive contribution to the War on Terrorism, and India’s strategic support to control and police the Indian Ocean sea-lanes saw drastically improved relations including the lifting of sanctions imposed Post-Pokhran II. The ensuing period has also seen improved military cooperation. In 2005, the United States signed a nuclear cooperation agreement even though India is not a part of Non-Proliferation Treaty because India has declared ‘no-first use of nuclear weapons’ and maintenance of ‘credible nuclear deterrence.’ In 2006, India and the US signed the ‘Indo-US Nuclear Pact’ on cooperation in civilian nuclear field. Moreover, US fund houses are showing great confidence in the Indian economy. They have recently launched five more India -specific exchange-traded funds (ETFs) to tap India’s growth potential. On other fronts too, India and the US continue to enter into agreements. They recently concluded three agreements including the creation of a science and technology endowment fund and a technical safeguard agreement for the launch of civilian satellites incorporating US components. Economic and Trade Relations U.S. is India’s largest exporting market, one of the largest trading partner and direct investors. Major Exports to US:

• Textiles

• Machinery

• IT Enabled Services

• Gems and Diamonds

• Chemicals

• Iron & Steel products

• Coffee, Tea, and other edible food products

Major Imports from US:

• Aircraft

• Fertilizers

• Computer Hardware

• Scrap metal

• Medical and Other Equipment

In July 2005, President Bush and Dr. Manmohan Singh created a new program called the Trade Policy Forum, which is run by the representatives from each nation. The goal of the program is to increase bilateral trade, which is a two-way trade deal and flow of investments. Buoyed by the surge in the bilateral trade levels, both countries are planning a limited bilateral trade agreement initially, involving sectors like HRD, energy, infrastructure and financial services among others. Bilateral trade between India and US amounted to US$ 41.75 billion in 2007-08.

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India imports aircraft and aviation machinery, nuclear reactors, optical and medical instruments, precious stones and metals, fertilizers and organic chemicals from the US. Indian imports from the US grew by an astonishing 79.33 per cent to reach US$ 21.02 billion in 2007-08 against US$ 11.72 billion in 2006-07. For the period April-December 2008, India imported goods worth US$ 13.89 billion from the US. India mostly exports gems and jewellery, organic chemicals and engineering goods and textiles to the US. During 2007-08, merchandise exports from India to US went up by 9.81 per cent to reach US$ 20.72 billion against US$ 18.85 billion in 2006-07. For the period April-December 2008, India exported goods worth US$ 15.71 billion to the US. U.S. Investments in India India's rapidly expanding economy along with the booming consumer market and easy availability of skilled personnel has been instrumental in several American companies investing in India. In fact, US has been the second largest foreign direct investor in India. It accounted for 9.12 per cent of the total FDI inflows into India during April 2000-December 2007. The overall foreign direct investment (FDI) equity flow into India from the US during April 2000-March 2009 was US$ 6.3 billion. During 2008-09, FDI inflow from the US was US$ 1.8 billion. US companies in India are involved in a broad spectrum of economic activities. From infrastructure to consumer goods and from information technology to consultancy services, American companies are represented in India as never before. And now, with the removal of quantitative restrictions on imports, this relationship will only grow further as more and more American products find their way into the Indian market. Some of the companies are:

• IT Segment - Microsoft, Intel, IBM, Hewlett-Packard, Dell, Yahoo, and Google

• Consumer goods sector - Coca Cola, Pepsi, McDonalds, and Whirlpool

• Automobile companies - General Motors, Chevron and Ford.

• Financial services - Citigroup, J.P. Morgan, and Morgan Stanley

• Hospitality majors - Starwood, Hampshire, Best Western International and Marriott among others are planning to make significant investments

Other factors that are on the forefront are the technical collaborations with Indian companies and the recognition of Indian Education System, which has made India one of the top ten destinations for US students to pursue their studies. Besides the big companies investing in India, the country continues to provide back office work to a large number of US companies and industries, such as Medical Transcription (MT). It is estimated the size of the US MT industry would reach US$ 16.8 billion by 2010. The work offshored is expected to be in the region of US$ 860 million in 2010, of which India is expected to capture US$ 647 million. Indian Investments in US US has emerged as one of the favoured destinations. Indian investments in the US have been growing significantly since 2002, by around 75 per cent per year. Investments in 2006 were estimated at around US$ 2 billion and rose sharply in 2007 to touch US$ 13 billion. In 2007-08 alone, an estimated US$ 10.25 billion was invested by Indian companies in the US. In 2008, investments were in excess of US$ 8 billion as on May 2008. Indian companies in US span across as diverse industrial sectors as steel, airlines, pharmaceuticals, auto parts, healthcare, hotels, chemicals and information technology. As a result, companies like Bharat Forge, Essar Group, HCL, ITC Kitchens of India, Jet Airways, Mahindra & Mahindra, Ranbaxy, Tata Group, Thermax, and Wockhardt among others have made their presence felt in US market.

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India, on its part, also provides a huge market for US education sector, with the increasing number of Indian students studying in the US. An indicator of this is the rapidly expanding number of Indian study centres set up in well known educational institutions, such as Harvard, MIT, Indiana University and University of Pennsylvania among others. According to a study jointly conducted by Indian industry association FICCI and Ernst & Young, during the last two years, Indian companies acquired 143 US firms across various sectors. While 94 deals were concluded in 2007-08, in the following year when the economy was on the downturn, Indians bought as many as 50 US entities that were on the verge of closure, saving thousands of jobs. According to the study, Tata Chemicals, Wipro, Reliance Communications and Firstsource Solutions were some of the top Indian entities that were involved in bailing out US companies in the red. Another study called the ‘Contribution of the Indian industry to the US economy’ says that during the period 2004-07, Indian industry had contributed US$ 105 billion to the US economy and created 300,000 jobs. Some of the significant acquisitions of India Inc have been:

• Pharma major Lupin has acquired the global rights for an intra-nasal steroid (INS) product, AllerNaze from

Collegium Pharmaceuticals, a mid-size innovator company in the US.

• S. Kumars Nationwide, along with its operating partner Emerisque, UK, has acquired Chicago-headquartered Hartmarx Corporation for US$ 119 million.

• Besides, Biocon Ltd has entered into an exclusive collaboration with the US-based generic drugs major Mylan Inc to develop, manufacture, supply and commercialise many high-value generic biologic compounds for the global markets.

• Hindalco acquired Atlanta-based Novelis, a leading aluminium sheet maker, for US$ 3.33 billion.

• Tata Chemicals (TCL) has bought the soda ash business of General Industrial Products for US$ 1 billion, making it the world's second-largest soda ash maker.

• Firstsource Solutions, a pure-play business process outsourcing provider, has acquired MedAssist Holding for US$ 330 million.

• Reliance Communications, India's second-biggest mobile services provider, has taken over the US-based Yipes, a provider of managed ethernet and application delivery services.

• Essar Global acquired Minnesota Steel, a US-based privately held company with iron ore reserves of 1.4 billion tonnes.

With the increased presence of Indian companies in the US, there has been a synchronous increase in the number of companies that are listed in the US stock exchanges to tap the American financial resources. Already, seven Indian companies have been listed on the NASDAQ with Infosys becoming a part of NASDAQ-100 index, reflecting its growing market capitalization. The number of Indian companies listed on the New York Stock Exchange (NYSE) is also growing, which includes Tata Motors, Videsh Sanchar Nigam Ltd., Mahanagar Telephone Nigam Ltd., Dr. Reddy's Laboratories, HDFC Bank, ICICI Bank, MS India Fund, and India Fund among others.

Note: What is not widely known is that Wall Street gets its investment research done in India and that the number of patent filings from India R&D centers of multinationals has been growing over the years.

With the strengthening bilateral trade involving mutual benefit especially in diverse fields, the Indo-US relationship is expected to emerge as one of the significant factors in shaping the global economy. 4. With European Union Formation of EU

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The European Union (EU) is an intergovernmental and supranational union of 25 democratic member states. The European Union was established under that name in 1992 by the Treaty on European Union (the Maastricht Treaty). However, many aspects of the Union existed before that date through a series of predecessor relationships, dating back to 1951. Attempts to unite the disparate regions of Europe can be dated back to the days of Frankish empire of Charlemagne and the Holy Roman Empire that united large areas under a loose administration for hundreds of years. In the 8th century, the concept of “Christendom” became a concept of a unified Europe against the Arab invasion, an idea that later led to the proposal for the creation of union of Christian nations against the Turks in 1464, following the Fall of Constantinople to the Turks in 1453. In 1940, the German economists and industrialists proposed the formation of “European Economic Community”, with a custom union and fixed internal exchange rates. Though fundamentally lacking the democratic structure, these events show the origin of the idea of an integrated Europe based more on political conquest than military invasion. In the post Second World War Europe, there was a new found impetus to go ahead with common pooling of resources to avoid any further wars in Europe. The European Union grew out of the European Coal and Steel Community (ECSC), which was founded in 1951, by the six founding members: Belgium, the Netherlands and Luxembourg (the Benelux countries) and West Germany, France and Italy. Its purpose was to pool the steel and coal resources of the member states, thus preventing another European war. On May 9, 1950 Schuman presented the proposal on the creation of an organized Europe, based on a plan developed by a French civil servant Jean Monnet, stating that it was indispensable to the maintenance of peaceful relations. This proposal, known as the “Schuman declaration,” is considered to be the beginning of the creation of what is now the European Union, which later chose to celebrate May 9 as Europe Day. The British refused to participate on grounds of national sovereignty. Significant Treaties The formation and development of EU is dominated by a number of treaties that were signed by the member nations. These are:

• The Treaty of Paris - 1951

• The Treaties of Rome – 1957 (Implemented in 1958)

• The Single European Act (1986)

• The Treaty of the European Union (also known as The Treaty of Maastricht) – 1991

• The Treaty of Amsterdam – 1997

• The Treaty of Nice – 2001 (came into force from February 2003) EU and trade growth – its global benefit 1. The European Union is the world's biggest trading partner 2. The EU has been committed to removing trade barriers between its individual members. 3. The multilateral trading system has been progressively liberalized through a series of international

negotiations over the past half-century. During that time, a. world trade has grown seventeen - fold, b. world production has more than quadrupled, c. world per capita income has doubled and

4. Average tariffs applied by industrialized countries have dropped from 40 % in 1940 to under 4 %. 5. Economic growth translates into employment as the Union itself has shown with the creation of half a million

new jobs after the abolition of its own internal trade barriers.

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India and EU India is not the major trading partner of the EU. Yet, India-EU relations go back as far as the early 1960s. The EU and India are important trading partners and founding members of the World Trade Organization (WTO) multilateral trading system. India's trade with the European Union has increased manifold over the past decade especially in the food and drinks sector, the statistical office of the European Commission has said. Trade and Commerce Between 2000 and 2008, EU27 trade in goods with India more than doubled in value: exports rose from 13.7 billion euro to 31.6 bn, while imports increased from 12.8 bn to 29.5 bn. As a result, the EU27surplus in trade with India increased from 0.8 bn in 2000 to 2.1 bn in 2008. India accounted in 2008 for 2.4% of EU27 exports and 1.9% of EU27 imports, and was the EU27 's 10 th most important trading partner. In the first half of 2009 the value of EU27 exports to India fell to 12.7 bn euro, compared with 15.7 bn in the first half of 2008, and imports decreased to 12.9 bn from 14.9 bn. As a result, the EU27 trade balance with India moved from a surplus of 0.8 bn in the first half of 2008 to a deficit of 0.2 bn in the same period of 2009. It should be noted that the fall in the value of EU27 trade with India recorded between the first half of 2008 and the first half of 2009 is in line with the general downward trend in the EU27 's total external trade over the same period. Major Exports to EU consist of textiles/clothing, agricultural products and chemicals Major Imports from EU consist of mostly machinery and chemical products Given India’s developing country status, India's exports to the EU currently benefit from reduced tariffs under the EU Generalised System of Preferences. India is the largest beneficiary of this scheme and in 2006 imported goods of a value of € 9.7billion under this scheme. As of 2008, the two-way trade between the India and EU amounted to Euro 61 billion, which is negligent compared to EU’s trade with China worth Euro 326 billion during the same period. The reason for the above, according to the EU officials, is the protected rules and regulations and tariff barriers. Tariffs Indian import tariffs have been substantially reduced, but still remain high by international standards. In addition to the Basic Customs Duty, various additional duties, taxes and charges apply resulting in a complex and non-transparent system. India also imposes a number of non-tariff barriers in the form of quantitative restrictions, import licensing, mandatory testing and certification for a large number of products, as well as complicated and lengthy customs procedures. Overall India's high tariff levels have remained a genuine problem for European industry. The elimination and/or reduction of tariffs are therefore an important goal of both the multilateral and bilateral negotiations. To address this problem, both India and EU have recently agreed to cut tariffs on 90 percent of the goods (in terms of volume). Investment The EU is India's largest source of foreign direct investment (FDI). EU27 Foreign Direct Investment (FDI) in India grew from 2.5 bn euro in 2006 to 5.4 bn in 2007, then fell to 0.9 bn in 2008, while Indian direct investment into the EU27 increased from 0.5 bn in 2006 and 0.9 bn in 2007 to 2.4 bn in 2008. EU investment has mainly taken place in the power/energy telecommunications and transport sectors. Bilateral agreements There are currently four agreements in force, namely,

• Agreement on Sugar cane (since 18 July 1975)

• 1994 Cooperation Agreement (signed in December 1993)

• Science & Technology Agreement (signed in November 2001)

• Customs Cooperation Agreement (signed in April 2004).

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India and EU have been holding regular India-EU yearly summit to improve bilateral trade relations. Some of the current negotiations include the Free Trade Agreement and Maritime Agreement, which according to India is likely to be finalized by the end of 2008 by the next bilateral summit. Contentious Issues India-EU have been on contentious ground on the multilateral agreements under the WTO on the Doha Developmental Agenda. Since the creation of the WTO in 1995, India has been involved in more than 30 dispute settlement proceedings. Yet cooperation has been happening at the expert level in order to remove existing trade barriers and to address the WTO negotiations. 5.5 INDIA’S PARTICIPATION IN OTHER BILATERAL AND MULTILATERAL ORGANIZATIONS India views Regional Trading Arrangements (RTA's) as 'building blocks' towards the overall objective of trade liberalization. Hence, it is participating in a number of RTA's which include Free Trade Agreements (FTA's); Preferential Trade Agreements (PTA's); Comprehensive Economic Cooperation Agreements (CECA's); etc. These agreements are entered into either bilaterally or in a regional grouping. Some of the major ones are: 1. South Asian Association for Regional Cooperation (SAARC) Certain aspects of India’s relations within the subcontinent are conducted through the SAARC. Its members are Bangladesh, Bhutan India, Maldives, Nepal, Pakistan, Sri Lanka, and very recently Afghanistan. Established in 1985, SAARC encourages cooperation in agriculture, rural development, science and technology, culture, health, population control, narcotics, and terrorism. Recently, high level working groups have been formed to strengthen cooperation in the areas of Information, Communications, and Technology, Biotechnology, Intellectual Property Rights, Tourism, and Energy. SAARC has intentionally stressed there core issues and avoided more divisive political issues, although political dialogue is often conducted on the margins of SAARC meetings. In 1993, India and SAARC partners signed an agreement gradually to lower tariffs within the region. Forward movement in SAARC summit scheduled for 1999 was not held until January 2002. In addition to the boost to the process of normalization of India’s relationship with Pakistan, the January 2004 SAARC summit in Islamabad produced an agreement to establish a South Asia Free Trade Area. SAARC members will reduce tariffs on intra-regional trade over a period of time following the ratification of the accord, with least developed countries allowed the most time to adjust. 15th SAARC Summit: The 15th SAARC Summit was held in Colombo on 2nd and 3rd August 2008. The major developments were the signing of four agreements on the

• Establishment of a SAARC Development Fund

• The creation of a South Asia Standards Institution

• The accession of Afghanistan to the South Asian Free Trade Agreement, and

• Mutual assistance in criminal matters. The major issues discussed at the summit were poverty alleviation, food security, energy crisis, terrorism, and climate change. Agreement on South Asia Free Trade Area (SAFTA) The Agreement on South Asian Free Trade Area (SAFTA) was signed by all the member States of the South Asian Association for Regional Cooperation (SAARC) during the twelfth 'SAARC Summit' held in Islamabad on 4-6th January, 2004. As a result, SAFTA came into force from 1st January, 2006.

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SAARC was established in Dhaka on December 7-8, 1985 with the objectives of:- promoting the welfare of people of South Asia; accelerating economic growth and social progress; promoting active collaboration in economic growth and social progress; promoting active collaboration in the economic, social, cultural, technical and scientific fields; strengthening cooperation in international forums on matters of common interest; and cooperating with international and regional organizations with similar aims and purposes. Its members include Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The objectives of SAFTA are to promote and enhance mutual trade and economic cooperation among the 'Contracting States' by inter-alia:- • Eliminating barriers to trade in, and facilitating the cross-border movement of goods between the territories of

the Contracting States;

• Promoting conditions of fair competition in the free trade area, and ensuring equitable benefits to all Contracting States, taking into account their respective levels and pattern of economic development;

• Creating effective mechanism for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes; and

• Establishing a framework for further regional cooperation to expand and enhance the mutual benefits of this Agreement.

According to the agreement, SAFTA will be implemented through the following instruments:- • Trade Liberalization Programme

• Rules of Origin

• Institutional Arrangements

• Consultations and Dispute Settlement Procedures

• Safeguard Measures

• Any other instrument that may be agreed upon 2. Asia-Pacific Trade Agreement (APTA) The Asia-Pacific Trade Agreement (APTA), formerly known as the Bangkok Agreement, was signed on 31st of July 1975 as an initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) is the regional development arm of the United Nations for the Asia-Pacific region. It focuses on issues that are most effectively addressed through regional cooperation and include:-

• The issues that all or a group of countries in the region face, for which it is necessary to learn from each other;

• The issues that benefit from regional or multi-country involvement;

• The issues that are transboundary in nature, or that would benefit from collaborative inter-country approaches;

• The issues that are of a sensitive or emerging nature and require further advocacy and negotiation. APTA/ Bangkok agreement is the 'First Agreement' on trade negotiations among the developing member countries of ESCAP. It is a preferential tariff arrangement that aims at promoting intra-regional trade through exchange of mutually agreed concessions by the members (developing country) of the ESCAP region. The Bangkok Agreement is essentially a preferential trading arrangement designed to liberalize and expand trade progressively in the ESCAP region through such measures as the relaxation of tariff and non-tariff barriers and trade-related economic cooperation. The developing countries and associate members of ESCAP are eligible to accede to the Agreement. The original signatories to the Agreement were Bangladesh, India, Lao People’s Democratic Republic, the Republic of Korea and Sri Lanka. Lao PDR has not issued customs notification on the tariff concessions granted, and hence to this extent, is not an effective participating member. China's accession to the Agreement was accepted at the Sixteenth Session of the Standing Committee of the Bangkok Agreement in April 2000.

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The objectives of the agreement is to promote economic development through a continuous process of trade expansion among the developing member countries of ESCAP and to further international economic cooperation through the adoption of mutually beneficial trade liberalization measures consistent with their respective present and future development and trade needs, and taking into account the trading interest of third countries, particularly those of other developing countries. The agreement is governed in accordance with the following general principles:-

• The Agreement shall be based on overall reciprocity and mutuality of advantages in such a way as to benefit equitably all participating States;

• The principles of Transparency, National Treatment and Most-Favoured-Nation Treatment shall apply to the trade relations among the Participating States;

• The special needs of least developed country Participating States shall be clearly recognized and concrete preferential measures in their favour shall be agreed upon.

3. BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) BIMSTEC (Bangladesh India Myanmar Sri Lanka and Thailand Technical and Economic Cooperation), a sub-regional economic cooperation grouping was formed in Bangkok in June 1997. Myanmar joined the grouping later in December 1997. Bhutan and Nepal too joined in February 2004. Its membership involves 5 members of SAARC (India, Bangladesh, Bhutan, Nepal & Sri Lanka) and 2 members of ASEAN (Thailand, Myanmar). Thus, it is visualized as a ‘bridging link' between the two major regional groupings i.e. ASEAN and SAARC. Its chairmanship of BIMSTEC rotates among the member countries in alphabetical order. The immediate priority of the grouping is consolidation of its activities and making it attractive for economic cooperation. At its first summit held in Bangkok on July 31, 2004, the acronym BIMSTEC was renamed as “Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation.” Initially, cooperation was proposed into 6 sectors. But, during the 11th Senior Official Meeting in New Delhi in August 2006, it was agreed that the areas of cooperation should be expanded to 13 sectors and each sector will be led by members in a voluntary manner. These include:

• Trade & Investment (Bangladesh);

• Technology (Sri Lanka);

• Energy (Myanmar);

• Transport & Communication (India);

• Tourism (India);

• Fisheries (Thailand);

• Agriculture (Myanmar);

• Cultural Co-operation (Bhutan);

• Environment and Disaster Management (India);

• Public Health (Thailand);

• People-to-People Contact (Thailand);

• Poverty Alleviation (Nepal);

• Counter-Terrorism and Transnational Crimes (India);

BIMSTEC member countries agreed to establish the BIMSTEC Free Trade Area Framework Agreement in order to stimulate trade and investment in the parties, and attract outsiders to trade with and invest in BIMSTEC at a higher level. The Framework Agreement on the BIMST-EC FTA was signed on 8th February, 2004 in Phuket, Thailand. The Framework Agreement includes provisions for negotiations on FTA in goods, services and investment. A Trade Negotiating Committee (TNC) has been constituted to carry forward the programme of negotiations. The TNC had its 1st Meeting in Bangkok on 7-8 September 2004. TNC's negotiation area covers trade in goods and services, investment, economic cooperation, as well as trade facilitations and also technical assistance for LDCs in BIMSTEC. It was agreed that once negotiation on trade in goods is completed, the TNC would then proceed with negotiation on trade in services and investment.

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4. India and the ASEAN India's engagement with the Association of South East Asian Nations (ASEAN) started with its “Look East Policy” in the year 1991. India’s focus on a strengthened and multi-faceted relationship with it is an outcome of ASEAN’s economic, political and strategic importance in the larger Asia-Pacific Region and its potential to become a major partner of India in trade and investment. Also, it now provides a land bridge for India to connect with the Asia-Pacific-centred economic crosscurrents shaping the 21st century market place. ASEAN seeks access to India’s professional and technical strengths. India and ASEAN have convergence in their security perspectives. ASEAN was established on 8 August 1967 in Bangkok by the five original member countries, namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand. Now, it has a membership of 10 countries namely Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. India is one of the four 'Summit level Dialogue Partners' of ASEAN. For a relationship that began warming up only about a decade ago, the India-ASEAN partnership has been trotting at quite a fast pace. India became a sectoral dialogue partner of ASEAN in 1992. The sectors were trade, investment, tourism and science and technology. Mutual interest led ASEAN to invite India to become a full dialogue partner of ASEAN during the fifth ASEAN summit in Bangkok in 1995 and a member of the ASEAN Regional Forum (ARF) in 1996. India and ASEAN have also been holding summit level meetings on an annual basis since 2002. Besides, India has also been involved in a continuous effort to upgrade the bilateral relationships with the ASEAN member countries. For example, India has entered into an agreement with Thailand for a free trade area (FTA). This was followed with a similar agreement with Singapore in a Comprehensive Economic Cooperation Agreement (CECA). Simultaneously, sub-regional cooperation has accelerated too. The Mekong-Ganga Cooperation (MGC) and the BIMST-EC (Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Cooperation) are indicators to this effect. A Framework Agreement on Comprehensive Economic Cooperation between ASEAN and India was signed on 8 th October 2003 in Bali (Indonesia). The key elements of the agreement cover:- FTA in Goods, Services and Investment, as well as Areas of Economic Cooperation. The Agreement also provided for an Early Harvest Programme (EHP) which covers areas of Economic Cooperation and a common list of items for exchange of tariff concessions as a confidence building measure. The objectives of this Agreement are:- • Strengthen and enhance economic, trade and investment co-operation between the Parties;

• Progressively liberalize and promote trade in goods and services as well as create a transparent, liberal and facilitative investment regime;

• Explore new areas and develop appropriate measures for closer economic co-operation between the Parties; and

• Facilitate the more effective economic integration of the new ASEAN Member States and bridge the development gap among the Parties.

The Free Trade Agreement (FTA) in Goods was signed by India and ASEAN as part of the Comprehensive Economic Cooperation Agreement (CECA), in August 2009 in Bangkok. The Union Minister of Commerce and Industry, Mr Anand Sharma, signed the ASEAN-India Free Trade Agreement in Goods with ASEAN economic Ministers. The FTA in Goods will integrate the two globally important economic blocks for mutually beneficial economic gains.

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Under the ASEAN-India FTA, the ASEAN member countries and India will lift import tariffs on more than 80 per cent of traded products between 2013 and 2016, starting from January 1, 2010. Also, tariffs on sensitive goods will be reduced to 5 per cent in 2016, while tariffs will be maintained on up to 489 items of very sensitive products. India and ASEAN are currently negotiating Agreements on Trade in Services and Investment, which are to be concluded by December 2009. The areas of economic cooperation are:-

• Where appropriate, the Parties agree to strengthen their cooperation in the following areas, including, but not limited to:-

o Trade Facilitation � Mutual Recognition Arrangements, conformity assessment, accreditation procedures, and

standards and technical regulations; � Non-tariff measures; � Customs cooperation; � Trade financing; and � Business visa and travel facilitation.

o Sectors of Cooperation � Agriculture, fisheries and forestry; � Services:- media and entertainment, health, financial, tourism, construction, business process

outsourcing, environmental; � Mining and energy:- oil and natural gas, power generation and supply; � Science and technology:- information and communications technology, electronic-

commerce, biotechnology; � Transport and infrastructure:- transport and communication; � Manufacturing:- automotive, drugs and pharmaceuticals, textiles, petrochemicals,

garments, food processing, leather goods, light engineering goods, gems and jewellery processing;

� Human resource development:- capacity building, education, technology transfer; and � Others:- handicrafts, small and medium enterprises, competition policy, Mekong Basin

Development, intellectual property rights, government procurement. o Trade and Investment Promotion

� Fairs and exhibitions; � ASEAN-India weblinks; and � Business sector dialogues.

• The Parties agree to implement capacity building programmes and technical assistance, particularly for the New ASEAN Member States, in order to adjust their economic structure and expand their trade and investment with India.

• Parties may establish other bodies as may be necessary to coordinate and implement any economic cooperation activities undertaken pursuant to this Agreement.

Trade The deepening of ties is reflected in the continued buoyancy in the trade figures. India's trade with ASEAN countries rose from US$ 9.7 thousand million in 2002-2003 to over US$ 30.64 billion in 2006-07. According to the Directorate General of Commercial Intelligence and Statistics (DGCIS), India's exports to ASEAN countries increased from US$ 10.41 billion in 2005-06 to US$ 12.56 billion in 2006-07, registering a growth of 20.67 per cent. Further during the first six months of 2007-08, India's exports totaled US$ 6445.4

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million, accounting for 8.96 per cent of the total Indian exports. Similarly, Indian imports from ASEAN countries have been on an upswing, increasing from US$ 10.88 billion in 2005-06 to US$ 18.08 billion in 2006-07, registering a whopping growth rate of over 66 per cent. During April-September 2007-08, imports have further increased to US$ 10.58 billion from US$ 8.54 billion in the same period during 2006-07, accounting for 9.48 per cent of total Indian imports. The deepening of ties between India and ASEAN is reflected in the continued buoyancy in the trade figures. The trade grew by 13 per cent during April-September 2007-08 to US$ 17.02 billion as against US$ 15.06 billion during the same period in 2006-07. ASEAN is India’s fourth-largest trading partner after the EU, US and China. Indo-ASEAN trade, which has been growing at a compounded annual growth rate (CAGR) of 27 per cent since 2000, stood at US$ 38.37 billion in 2007-08. In the last financial year, bilateral trade between India and ASEAN was more than US$ 40 billion. India and ASEAN have set an ambitious target of achieving bilateral trade of US$ 50 billion by 2010. The trade momentum is likely to continue further with India and ASEAN planning to implement a Free Trade Agreement (FTA) at the earliest. 6th India-ASEAN Summit At the 6th India-ASEAN Summit held at Singapore in November 2007, India proposed to enhance bilateral trade with the ASEAN countries to a target of US$ 50 billion by 2010. It also proposed: 1. A US$ 1 million fund for an India-ASEAN Science and Technology Fund. This fund would be used for

collaborative research and development. 2. A joint network on climate change for which India has made an initial contribution of US$ 5 million to set up

an India-ASEAN Green Fund. 3. Joint production of medical formulations and for cooperation in traditional medicine systems which are

popular in ASEAN as well as in India. 4. Working on a target of one million tourists to India from ASEAN countries by 2010, New Delhi will host the

Commonwealth Games. More than two million tourists from India travelled to ASEAN travel destinations this year in comparison to 280,000 ASEAN tourists who travelled to India.

The member countries of ASEAN include Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei Darussalam, Vietnam, Laos, Myanmar and Cambodia. 5. With Singapore The growing bilateral economic relationship is reflected in the rapidly rising bilateral trade between Singapore and India. The cumulative FDI inflow to India from Singapore during April 2000-April 2009 was around US$ 7.9 billion. Singapore continues to be the single largest investor in India amongst the ASEAN countries with FDI inflows into India and the second largest amongst all countries, rising to US$ 3.45 billion in 2008-09. FDI inflows from Singapore between April-July 2009 stood at US$ 759, taking the cumulative inflows from April 2000 - July 2009 to US$ 8.57 billion. In 2005, India and Singapore signed the much awaited Comprehensive Economic Co-operation Agreement (CECA), an integrated package comprising a free trade agreement, a bilateral agreement on investment promotion and protection, an improved double taxation avoidance agreement and a work programme for cooperation in healthcare, education, media, tourism, customs, e-commerce, intellectual property, and science and technology. Consequently, as of June 2007, about 2,000 Indian companies were based in Singapore, with their business ranging from traditional sectors such as retail to fast growing IT companies.

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The total bilateral trade during 2007-08 was US$ 15.49 billion and India exported goods worth US$ 6.6 billion in April-December 2008-09. 6. With Malaysia The bilateral economic relationship between India and Malaysia has been steadily moving ahead. Malaysia has been a huge source of foreign direct investment for India. In fact, Malaysia is the twenty-fourth largest overall investor and second largest investor among ASEAN countries with a total inflow of US$ 233.74 million during April 2000-July2009. Bilateral trade among the two countries amounted to US$ 8.6 billion during 2007-08, an increase of 30.07 per cent over 2006-07 when it was US$ 6.59 billion. During the period April-December 2008-09, India exported goods worth almost US$ 2.03 billion to Malaysia. Malaysian investments are mainly in the areas of liquified petroleum gas and other products, power plants, paging systems, and construction of highways. Simultaneously, several Indian companies, involved in about 60 joint ventures, have already been operating in Malaysia. 7. With Myanmar: While India is Myanmar's fourth largest trading partner and second largest export market, Myanmar in turn is the gateway to India's 'Look East' policy. The Indo-Myanmar relationship, as a result, has come to hold significant role in the economic engagement of both the countries. During the period April-December 2008-09, India exported goods worth US$ 173.28 million to Myanmar comprising mainly of iron and steel and pharmaceuticals. FDI inflows from Myanmar into India totalled to US$ 8.96 million during April 2000-July 2009. Bilateral trade stood at US$ 995.37 million during 2007-08. In April 2008, India and Myanmar signed the Double Taxation Avoidance Agreement, which will enable both nations to prevent tax evasion and ensure that business profits are taxed only in the country where the company has a permanent establishment. India is engaged in several river and land-based projects in Myanmar such as the reconstruction of the Settwe port in Myanmar, Kaladan Multi-Modal Transport project and the Tamu-Kalewa-Kalemyo road project. The India-Myanmar gas pipeline project is another area where India is deeply involved in Myanmar. India has signed three important agreements with Myanmar related to exploration of natural gas, satellite-based remote sensing, and promotion of Buddhist studies in Myanmar. The two countries also plan to establish a centre for enhancement of information technology (IT) skill in Yangon. India is also looking at joint cooperation with Myanmar in several other fields including automobiles, textiles, and agro-based industries. 8. With Indonesia: Both India and Indonesia have been strengthening their bilateral economic relations, attracted by the huge domestic markets in both the countries. While India is the second largest nation globally (in terms of population), Indonesia is the largest nation among the ASEAN countries (in terms of population). The buoyancy in bilateral ties is reflected in the booming trade between the two countries. Bilateral trade which increased by 44 per cent to US$ 6.21 billion during 2006-07 over US$ 4.3 billion during 2005-06, continued to grow in 2007-08. During the period April-December 2008-09, India exported goods worth almost US$ 1.82 billion to Indonesia, comprising mainly of organic chemicals, mineral fuels and ships and boats. The trade target likely to be achieved by 2010 is US$ 10 billion. FDI inflows from Indonesia into India totalled to US$ 51.90 million during April 2000-July 2009.

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Moreover, India and Indonesia have signed a memorandum of understanding (MoU) for cooperation in the field of agriculture and allied sectors. 9. With Thailand: The Royal Thai Embassy hosted a three-day festival called 'Destination Thailand' Plaza in New Delhi in December 2007 to mark the 60th anniversary of diplomatic relations between India and Thailand. India and Thailand signed a free trade agreement in 2004 to materialize the trade potential between the two countries. Yet even without the agreement, trade is booming. India and Thailand did business worth US$ 606 million in 1990. Bilateral trade between the two countries touched US$ 4.11 billion in 2007-08, as compared to US$ 3.18 billion in 2006-07, registering a growth of 28.97 per cent. During the period April-December 2008-09, India exported goods worth almost US$ 1.44 billion to Thailand. Total FDI inflow during April 2000-July 2009 from Thailand was US$ 55.36 million. The sectors that have witnessed Thai investment are telecommunication, hotel & tourism, food processing, trading and chemicals. With the signing of the free trade agreement (FTA) between India and ASEAN countries, Thailand is targeting US$ 10 billion bilateral trade in 2010. Indian companies in the gems and jewellery sector have already established a reputation for themselves in Thailand and a large percentage of India's exports to Thailand (in value terms) originate from this sector. 10. India-Mercosur Preferential Trade Agreement (PTA) A Framework Agreement was signed between India and MERCOSUR on 17th June 2003. The aim of this Framework Agreement is to create conditions and mechanisms for negotiations in the first stage, by granting reciprocal tariff preferences and in the second stage, to negotiate a free trade area between the two parties in conformity with the rules of the World Trade Organization. As a follow up to the Framework Agreement, a Preferential Trade Agreement (PTA) was signed in New Delhi on January 25, 2004. The aim of this Preferential Trade Agreement is to expand and strengthen the existing relations between MERCOSUR and India and promote the expansion of trade by granting reciprocal fixed tariff preferences with the ultimate objective of creating a free trade area between the parties. MERCOSUR is a trading bloc in Latin America formed in 1991 and comprising Brazil, Argentina, Uruguay and Paraguay. It was formed with the objective of facilitating the free movement of goods, services, capital and people among the four member countries. It is the fourth largest integrated market after the European Union (EU), North American Free Trade Agreement (NAFTA) and ASEAN. 11. Other agreements include: � India And Singapore Comprehensive Economic Cooperation Agreement (CECA) � India-Sri Lanka Free Trade Agreement (ISFTA) � India-Chile Preferential Trade Agreement (PTA) � India-Afghanistan Preferential Trade Agreement (PTA) � India-Bhutan Trade Agreement � India-Nepal Trade Treaty � Framework Agreement For Establishing Free Trade Between India And Thailand � Free Trade Agreement (FTA) Between India And Gulf Cooperation Council (GCC) � India- Japan Trade Agreement � Joint Study Group Between India And Korea � Trade Agreement Between India And Bangladesh � Comprehensive Economic Cooperation And Partnership Agreement (CECPA) Between India And Mauritius

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5.6 INTERNATIONAL ORGANIZATIONS 1. The United Nations Organization (Uno) The United Nation Organization came into existence on 24th October 1945.The name was devised by the then US President Franklin D. Roosevelt. At present, there are 192 members in the UNO. Taiwan & Vatican City are not the members. Vatican City is the permanent observer for the UN. Headquarters - First Avenue at 46th Street, UN Plaza, New York City-10017. Official Languages- English, Spanish, Arabic, Russian, French, and Chinese (Mandarin) The Principal Organs of the UNO are: General Assembly - The General Assembly consists of representatives of the member nations. Each state has one vote, but may send 5 representatives. The assembly meets at least once in a year. Special sessions may be summoned by the Secretary General, on a request by the Security Council. Security Council - It consists of 15 members, each of which has one vote. There are 5 permanent & 10 non permanent members. The 5 permanent members are USA, Russia, UK, France & China. The 10 non permanent members are elected by the General Assembly for a period of 2 years. The permanent members have the power to veto any decision. The Secretariat - It is composed of the Secretary General, the Chief Administrative Officer of the Organization and an international staff appointed by him under the regulations of the General Assembly. However the Secretary General, the High commissioner of Refugees and the Managing Director of funds is appointed by the General Assembly. Trusteeship Council - The Charter of the UN provides for an international trusteeship system to safeguard the interests of the inhabitants of territories which are not yet fully self-governing and which may have been placed there under by individual trusteeship agreements. International Court - The International Court of Justice was created by an international treaty, the statute of the Court, which forms an integral part of the UN charter, and all the members are ipso facto parties to the statute of the court. There are 15 judges, appointed for a 9 year term. The court has its seat at Hague but may sit elsewhere, whenever it considers this desirable. The expenses of the Court are borne by the UN. Economic and Social Council - It is responsible under the General Assembly for carrying out the functions of the UN with regard to international, social, cultural, educational, health and related matters. The Economic and Social council consists of 54 member States elected by a two-thirds majority of the General Assembly. UN Secretary Generals

• Trygve Lie (Norway) 1946-53

• Dag Hammarskjold (Sweden) 1953-61

• U Thant (Burma) 1961-71

• Kurt Waldheim (Austria) 1972-81

• Javier Perez De Gueller (Peru) 1982-91

• Boutros Boutros Ghali (Egypt) 1992-96

• Kofi Annan (Ghana) 1997-2007

• Ban Ki Moon (South Korea) 2007- till date

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Specific UN Agencies and their Headquarters The United Nations Development Program (UNDP) – UNDP is the UN‘s global development network advocating change and connecting countries to share knowledge and resources which help build a better life in countries across the globe. Presently it has offices in 166 member countries. UNDP is headquartered at New York, US. The United Nations Children’s Fund (UNICEF) – UNICEF was initially set up in 1946 as an emergency fund to provide post-war relief to children in different countries. Today, as a children’s fund, UNICEF concentrates its activities on providing assistance to children and mothers in developing countries, aiming at improving their quality of life. UNICEF is headquartered at New York, US. The United Nations Educational & Cultural Organization (UNESCO) – UNESCO was founded on 16 November 1945 to assist developing countries in their educational projects, to help the countries in scientific development and to build cultural understanding between the nations. UNESCO is headquartered at Paris, France. 2. The International Monetary Fund (IMF): IMF is an international Organization which has 184 member countries. It was established in 1945 to promote international monetary co-operation and exchange stability between nations which in turn would promote economic growth and increase employment opportunities. IMF also provides temporary financial assistance to its member countries to ease their balance of payment. IMF is headquartered at Washington DC., US. 3. The International Bank for Reconstruction and Development: (IBRD, commonly known as the World Bank) – The ‘World Bank’ was formed after the Bretton Woods conference in 1944, but began operations in 1946. It aims at providing financial and technical assistance to developing countries around the World. Presently World Bank has 184 member countries and is headquartered at Washinton DC, US. 4. The World Trade Organization (WTO): WTO was formed as an international trade body to replace General Agreement on Trade and Tariffs (GATT) in 1995. WTO is the only international body dealing with rules of trade between the countries to help producers of goods and services, exporters and importers conduct their business. It is headquartered at Geneva, Switzerland. 5. The International Atomic Energy Agency (IAEA) IAEA was set up in 1957. It is presently headquartered at Vienna, Austria. 6. The Food and Agriculture Organization (FAO) FAO was set up in 1945. It is presently headquartered at Rome, Italy. 7. The World Health Organization (WHO) W.H.O was set up in 1946. It is presently headquartered at Geneva, Switzerland. 8. The International Finance Corporation (IFC) IFC is an affiliate of the World Bank, and was set up in 1956. It is headquartered at Washinton DC, US. 9. The International Telecommunication Union (ITU) ITU was set up in 1932. It is headquartered at Geneva, Switzerland. 10. The International Civil Aviation Organization (ICAO) ICAO was set up in 1944. It is headquartered at Montreal, Canada.

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11. The Universal Postal Union (UPU) UPU was set up in 1875. It is headquartered at Berne, Switzerland. 12. The International Labor Organization (ILO) ILO was set up in 1919. It is headquartered at Geneva, Switzerland. 13. The International Maritime Organization (IMO) IMO was set up in 1948. It is headquartered at London, UK. 14. The Asian Development Bank (ADB) – It is headquartered at Manila, Phillipines. 15. The Association of South East Asian Nations (ASEAN) – It is headquartered at Jakarta, Indonesia. 16. The European Union (EU) – It is headquartered at Brussels, Belgium. 17. The INTERPOL – It is headquartered at Lyons, France 18. The North Atlantic Treaty Organization (NATO) – It is headquartered at Brussels, Belgium. 19. The Organization of Petroleum Exporting Countries (OPEC) – It is headquartered at Vienna, Austria. 20. The Organization of Arab Petroleum Exporting Countries (OAPEC) – It is headquartered at Kuwait. 21. The South Asian Association for Regional Cooperation (SAARC) – It is headquartered at Kathmandu, Nepal. 22. The Red Cross – It is headquartered at Geneva, Switzerland.

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Chapter 6 – Interesting Facts about India


• When many cultures were still nomadic forest and grassland dwellers over 5,000 years ago, India had an established Harappan culture in Sindh valley known as the Indus Valley Civilisation.

• India never invaded any country in her last 10,000 years of history. Mahatma Gandhi and Mother Teresa, the Saint of Calcutta as she was called, are considered the greatest apostles of peace of the twentieth century.

• India was the richest country on earth until after the coming of the British in the17th century. Christopher Columbus was attracted by her wealth. British, French, Portuguese, Dutch, Danish, and other "adventurers" were racing against each other to establish trading privileges in India.

• India is the world’s largest democracy and 6th largest country.

• The art of navigation was developed on the river Sindh 6,000 years ago. The very word navigation is derived from the Sanskrit word "nav gatih". The word "navy" is also derived from Sanskrit "nou.”

• The strategy game of Chess [Shatranja or Ashtapada] was invented in India.

• The first postage stamps of Asia, the "Scinde Dawk", were issued in India in 1852 in the District of Sindh. The first bi-coloured stamps of the British Commonwealth were also issued in India in 1854. The world's first air post service was introduced in India in 1911.

• According to the Geological Institute of America, up until 1896, India was the only source of diamonds to the world. Kohinoor, the jewel in the crown of the British monarch, is from India. Even today, India is the largest diamond cutting and polishing centre in the world.

• The four religions born in India - Hinduism, Buddhism, Jainism, and Sikhism, are followed by 25% of the world's population.

• Islam is India's and the world's second largest religion. There are 300,000 active mosques in India, more than in any other country, including the Muslim world.

• The Vishnu Temple in the city of Tirupathi built in the 10th century, is the world's largest religious pilgrimage destination. Larger than Rome or Mecca, an average of 30,000 visitors donate $6 million (US) to the temple everyday.

• The oldest city in the world that is still inhabited today is Varanasi or Benaras.

• The art of Yoga that is now popular world wide originated in India and was performed by highly revered sages in ancient times.

• Steel was invented in India before 1000 B.C. Many varieties of steel were made and characterized. 6.2 MATHEMATICAL FACTS

• Sage Aryabhatta created the concept of the number zero in India. The place value system and the decimal system were also developed in India in about 100 B.C.

• In the 5th century C.E. Bhaskaracharya calculated the time taken by the earth to orbit the sun, hundreds of years before the astronomer Smart. Time taken by earth to orbit the sun then was computed as 365.258756484 days.

• The value of pi was calculated first by Budhayana, and he explained the wider ramifications of what is known as the Theorem of Pythagoras. He discovered this in the 6th century, long before the Arab and European mathematicians.

• Algebra, Trigonometry, and the basic concept of Calculus came from India. Sridharacharya propounded quadratic equations in the 11th century. The largest number the Greeks and the Romans used was 106 whereas Hindus used numbers as large as 1053 with specific assigned names as early as 5000 B.C., even during the Vedic period.

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• Hindus created the largest measure of time, called "kalpa,” which is the time between the birth and annihilation of the universe. This measure comes very close to the currently accepted life span, according to the pulsating theory of the universe, which is around 25 billion years.


• The world's first University was established in Takshashila in about 700 B.C. More than 10,500 students from all over the world studied more than 60 subjects. The University of Nalanda built in the 4th century C.E. was one of the greatest achievements of ancient India in the field of education.

• Sanskrit is the mother lode of all the Indo-European languages. Sanskrit is the most suitable language for computer software, says a report in Forbes magazine, July 1987.

• Ayurveda is the earliest school of medicine known to Mankind. Charaka, the father of medicine, consolidated Ayurveda 2500 years ago.

• USA-based IEEE has established what has been a century-old suspicion in the world of scientific community, that the pioneer of wireless communication was Dr. Jagdeesh Bose of Calcutta and not Marconi.

• The earliest reservoir and dam for irrigation was built in Saurashtra, Western India. By direction of the Saka king Rudradaman I around 150 C.E., an artificial lake aptly named "Sudarshana" [beautiful] was constructed on the hills of Raivataka during the reign of Chandragupta Maurya.

• Sushruta is the father of surgery. 2600 years ago he and physicians of his period were conducting surgical procedures like caesarean, cataract, artificial limbs fitment, fracture treatment, urinary stones removal, and even plastic and brain surgery. Usage of anesthesia was well known in ancient India. Over 125 surgical instruments were used. Deep knowledge of anatomy, physiology, etiology, embryology, digestion, metabolism, genetics, and immunology is found in many ancient texts.


• India is the second largest populous country, being home to around 16% of the world’s population yet accounts for only 2.4% of the total world area.

• The world's highest cricket ground is in Chail, Himachal Pradesh. Built in 1893 after leveling a hilltop, this cricket pitch is 2444 meters above sea level.

• The Baily Bridge is the highest bridge in the world. It is located in the Ladakh valley between the Dras and Suru rivers in the Himalayan mountains. It was built by the Indian Army in August 1982.

• India has one of the largest road networks in the world, aggregating 3.34 million kilometers. It comprises 66,590 km of National Highways, 1,28,000 km of State Highways, 4,70,000 km of Major District Roads and about 26,50,000 km of other District and Rural Roads.

• India is the largest consumer of gold jewellery in the world and accounts for about 20 per cent of world consumption.

• India is the largest producer of mango, banana, milk, dairy products, coconuts, cashew nuts, ginger, turmeric and black pepper. It is also the second largest producer of rice, wheat, groundnuts, sugar, fruits and vegetables.

• We all know India’s national flower (Lotus), Bird (Peacock), Animal (Tiger) but ever heard of Tree and Fruit – they are the Indian Fig (Banyan) and Mango.