Posts from — August 2010

India’s Cabinet cleared a nuclear liability bill earlier today, a crucial step on the path to bringing foreign companies into its burgeoning nuclear energy market. The bill caps the liability of foreign firms at $320 million in the case of an industrial accident.

Bowing to pressure from the political opposition parties, India’s government made 18 changes in the Civil Liability for Nuclear Damage Bill, 2010, while adopting most of the recommendations made by the parliamentary standing committee.

However, the government has rejected the most controversial recommendation of the committee for the addition of a word “and” between clause 17 (a) and (b) of the proposed legislation, which talks about the nuclear power plant operator’s right to recourse for compensation from a supplier in the event of an accident. The recommendation for adding the word “and” had triggered vociferous objections from the BJP and Left parties which said it would dilute the operator’s right to seek compensation from the supplier.

“Let me assure you that of the 28 countries that have similar civil nuclear liability legislation, this Indian law is the strongest,” Science and Technology Minister Prithviraj Chavan said.

With these changes, the government seems to have pacified most of the political parties, ensuring a rather smooth passage for the bill. Both the BJP, a right-wing party and the communist Left took credit for the amendments, saying the government bowed under pressure to make the bill “India-centric” instead of “US-centric”.

Chauhan stated  that in order to ensure that the victim of a likely nuclear accident is not made to wait endlessly, the Bill stipulates that when an accident happens and is notified, then a commission will be appointed to decide on the compensation and liability. “The victim will be paid in a certain time. The appointment of the commission does not take away the right of the victim to go in appeal to a High Court or the Supreme Court,” the Minister said, adding that this was one of the most important features of the Bill as it will ensure that a Bhopal-like situation does not occur again. The Minister said that another amendment related to the creation of three categories of plants — large nuclear power projects, research reactors (which could be in the private sector or universities) and nuclear fuel cycle facility.

The proposed amendments to the Bill have already been sent to the Lok Sabha (India’s lower house of Parliament) Secretariat and the Bill is likely to be introduced in the House on Saturday or early next week.

Passage of this bill brings American companies one step closer to doing business in India.

In recent weeks, the private equity giant, Blackstone Group decided to invest $300 million to buy a minority stake in Indian power developer Moser Baer Projects Private Ltd, which seeks to build out thermal, solar and hydro power generation as well as coal mining operations.The parent of this entity happens to be the world’s second largest maker of CDs and DVDs in the world and a venture-funded company.

Blackstone also invested $59 million for a stake in Monnet Power, a subsidiary of publicly-traded Monnet Ispat and Energy. This entity owns a coal-fired plant in Orissa.

Akhil Gupta, managing director of Blackstone Advisors India, said the group had already invested $1.25bn in India in equity commitments and expect to invest another $4 billion by 2015.

To the India Expert, it is noteworthy that Blackstone is not choosing to direct its dollars to those with significant power generation experience in India, including private sector players such as Tata Power and Reliance Infrastructure. Perhaps their backing of unproven companies in this sector is an indication of their great confidence in the exploding demand for electrical power (and I would agree with that assumption).

One of the great myths for foreign companies entering India, is that Indians speak English, just like them. The implication is that somehow foreign entrants will be able to perform in India with little adjustment to their good old (American, British, Australian, Canadian) ways.

This myth hurts many executives. First of all, less than 15 percent of the Indian population speaks any English at all.  So if you are selling soap, cell phone services, or televisions, you had better speak many of India’s 23 languages. In fact Western Union (which makes more money in India, than almost anywhere else), advertised almost exclusively in local languages.

Second, the segment that does speak English, has their own dialect of “Indian English“.  So an Indian may “pre-pone” a meeting, the reverse of postpone. They may refer to an annexure to a document (an appendix or attachment) and they may tell you that they will “revert” when you make a request of them; this means that they will get back to you or will reply to you later.

North India’s leading English Language Paper, the Hindustan Times,  just carried a story on my company’s Indian-English Dictionary, entitled How to ‘do the needful’ in India with tashan

India celebrated its 63rd indepdence day on August 15th. President Obama sent the following message to India and to Indian Americans.

:On behalf of my administration and the American people, I wish to congratulate all who will celebrate the 63rd anniversary of India’s independence.  Indians around the world can not only look back on their history with pride, but can also look ahead to a future filled with hope and further progress.  Ever since August 15, 1947, India’s non-violent struggle for freedom, its rejection of terrorism and extremism, and its belief in democracy, tolerance, and the rule of law have been an inspiration and beacon of hope for people around the world.  India’s example has had a profound effect on many countries, including the United States.”

Since the President is heading to India right after the November mid-term elections, from Nov 7-10, he added

“Ties between our two peoples have never been stronger.  The over two million members of the Indian American community are living examples of the bonds that bind our nations together and their accomplishments have become well-known and admired in both countries.  The strategic partnership between our countries will continue to grow, and I am looking forward to my November visit to India. Our goal is to make this one of the defining partnerships of the 21st century.”

The share price of Cummins India jumped 3.05% to Rs 658 at 12:30 IST on BSE, after net profit surged 56% to Rs 140.23 crore on 45% rise in net sales to Rs 910.01 crore in Q1 June 2010 over Q1 June 2009. The large-cap stock had outperformed the market in the past one quarter, gaining 14.13% as compared to the Sensex’s return of 5.42%.

Cummins India is part of the American Cummins group that leads in large engine manufacture.