Stock Markets open higher, continue rally

Mumbai, Dec 15 (IANS) Indian equities markets, on an upswing since last week, continued the good show Monday with a key index of the Indian stock market opening 2.12 percent higher than its previous close.

An hour into trading, the 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was ruling at 205.56 points or 2.12 percent higher than its close of 9,690.07 Friday.

The broader-based 50-share S&P CNX Nifty of the National Stock Exchange (NSE) was also up at 2,993.55 points or 2.47 percent from its close of 2921.35 points Friday.

Asian markets were also ruling higher with the Nikkei, a key index of the Tokyo Stock Exchange, 4.88 percent higher than its previous close while the Hang Seng of the Hong Kong Stock Exchange rose by 3.07 percent over its previous close.

Tecnomen to tap emerging markets with Indian purchase.

Mon, Dec 15: Finnish telecom software firm Tecnomen Oyj said on Monday it had agreed to buy 96.6 percent of smaller Indian rival Lifetree Convergence Ltd. for 33.2 million euros ($44 million) in cash and shares.

"The transaction provides access to a larger customer base in emerging markets such as Africa and Asia, to drive revenue growth in coming years," Tecnomen Chief Executive Jarmo Niemi said in a statement.

Tecnomen said the deal is expected to be completed by the end of March 2009, after which it plans to start trading under the name Tecnomen Lifetree.

Lifetree's revenue in January-September was five times smaller than Tecnomen's but its operating profit margin was 37.4 percent, compared with Tecnomen's 11.7 percent.

Tatas could bid for African iron ore mine.

Mon, Dec 15 01:06 AM

Tata Steel could bid for a strategic stake in Mbalam iron ore mine in Cameroon by partnering Sundance Resources, the company that owns the West African mine, investment banking sources told Hindustan Times. International media reports said Sundance Resources Chairman George Jones recently returned from a road show to promote Mbalam's potential.

Sources familiar with the development said Jones met senior Tata Steel officials last month on equity participation in the project. Arcelor Mittal, Posco and Rio Tinto are understood to be the other potential bidders for the Mbalam project for which the potential valuation is not yet known.

A Tata Steel spokesman said reports of his company's bid was "completely speculative and untrue." However, company Managing Director B. Muthuraman said recently that it was looking for captive raw material security.

Sundance did not respond to an e-mail seeking its comments. According to industry analysts, Mbalam could be one of the world's biggest iron ore mines with a capacity to produce 35 million tonnes per year at least for the next 20 years.

"It's not clear whether Tata is putting a bid for Mbalam. However, if so, Mbalam would assure a long-term raw material security for its operations especially outside India," said an investment banker close to the Tata Group.

Tata Steel has a production capacity of 28 million tonnes and plans to have at least 40 per cent of raw material resources from captive units over the next five years. It had bought stake in a Canadian iron ore project and has equity participation in another iron ore mine in Ivory Coast.

Corus, the Anglo-Dutch group Tata Steel has acquired, is particularly vulnerable to raw material shortage.

Banks cut interest rates on some home loans

Mumbai, Dec 15 (IANS) State-run commercial banks Monday cut interest rates on home loans up to Rs.2 million (Rs.20 lakh/$40,000), with several other benefits like nil processing fee and free life insurance.

Home loans of up to Rs.500,000 will invite an interest rate of 8.5 percent and those up to Rs.2 million will attract an interest rate of 9.25 percent, State Bank of India (SBI) chairman O.P. Bhatt told a press conference here.

The incentives, being offered by all public sector banks, will be available till June 30, 2009, he added.

World Bank to lend $14 bn to India for infrastructure projects

New Delhi, Dec 12 (IANS) The World Bank will provide $14 billion to India over the next three years to facilitate infrastructure development projects and to achieve the Millennium Development Goals, the bank said Friday.

The package will be under World Bank Group's new Country Strategy for India, it said in a statement.

'The World Bank Group is tailoring its assistance to India both to fast-track much-needed infrastructure development and to support the country's seven poorest states achieve better living standards,' the Bank said.

Part of the loan would be spent in the seven low-income states - Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh - to support the poverty reduction programmes.

'The strategy is designed to boost support to these states, but also not to forget about the poorest people in India's middle income states,' said World Bank economic advisor Giovanna Prennushi in a statement.

'The World Bank and the government will jointly implement a more rigorous project selection process than in the past,' World Bank acting country director for India Rachid Benmessaouds said.

How risky is business in India?

Until Nov. 26 the strongest force pushing India forward was a mix of good fundamentals and that intangible something that industry calls "sentiment." Forged in the years of 9 percent growth, this euphoria inspired Indians to economic greatness and lured outside investors eager to be part of the Indian miracle.

Then the shooting started in south Mumbai. The three horrendous days that followed laid bare the gaps between India's image and reality, sparking a nationwide introspection about the nation's future. The fear is that India's mounting problems could drag the country back to its pitiful past. Its governments, despite a manufactured public image, have always been unwieldy; its economy, despite the plenty of the boom years, is premised mostly on future potential; and its much-flaunted stability is no such thing.

India's fragility is revealed by a pattern of diffused violence — a bomb here, a killing there — that goes unnoticed even in India. Most outsiders (and most investors) don't realize how dangerous a place India can be. Since 1993, when 13 bomb blasts in one day killed 257 in Mumbai, just over 29,000 people have died in terrorist attacks, including insurgencies in Kashmir and the Northeast, according to a BusinessWeek analysis of data from the Home Affairs Ministry. Thousands more have died in anti-Muslim riots. At least another 4,500 have perished since 2002 in a Maoist rebellion that simmers, and sometimes boils over, in the mineral-rich region of Chattisgarh, where foreign companies plan to invest heavily.

Just after the Mumbai attacks, three people were killed in a train blast in Assam, a northeastern state that produces more than $2 billion worth of tea each year, most of it exported. "It is not just this one unprecedented attack in Mumbai," says Chandrajit Banerjee, director general of the Confederation of Indian Industry, India's most influential trade lobby. "Across the country we see ... violence."

It's quite a contrast to the strengths India has used to attract global capital. Engineers and programmers are first class. Skilled, dedicated workers toil for wages much lower than in the West. The nation's blend of entrepreneurial spirit and democratic values has challenged the more rigid China model. A top-notch executive class boasts chief executives like Ratan Tata, chairman of the Tata Group and innovator in categories from autos to hotels. Tata owns the Taj Mahal Palace & Tower Hotel, which was ravaged in the attacks and which he vows to rebuild.

These strengths still attract investors. But foreign companies are not immune from the violence. In Orissa on the east coast, where billions in foreign investment lie tied up, Korean companies like steelmaker Posco have had executives kidnapped and land promised to them but never delivered: Protesters wield slogans and weapons to keep earthmovers at bay. In New Delhi, the Indian CEO of an Italian company's subsidiary was killed by a mob of employees angry over layoffs. And Patrick Cescau, CEO of consumer-products giant Unilever, narrowly escaped death in the massacre at the Taj Mahal hotel where he was dining with colleagues.

Seeking protection — fast
If south Mumbai is visited by violence again, the 110-plus multinationals with regional offices there could be targets. Citigroup, Bank of America, ABN Amro, HSBC, Goldman Sachs, Morgan Stanley, JPMorgan Chase — all have offices there. "The targets identified demonstrate that the intention is to create panic and shatter the confidence of investors in India and global investors coming to India," says Habil Khorakiwala, managing director of Indian drugmaker Wockhardt. The private equity arms of Morgan Stanley, and Englefield Capital, which have offices in the Oberoi Trident Hotel, are looking for new premises in the city, according to an investment banker. No wonder Raghu Raman's phone has been ringing nonstop. An ex-Indian Army man, Raman is CEO of Mahindra Special Services Group, which offers security to blue-chip clients like Hindustan Unilever, Merrill Lynch, ABN Amro, HSBC, and others, many of whom want to beef up their security. Prospective clients also want protection fast. Raman says some multinationals have temporarily flown their top expat execs out of India.

Indian executives are even more alarmed than the multinationals. "We virtually handed Mumbai on a platter to the terrorists," says Rahul Mehta, managing director of Creative Group, a textile exporter in Mumbai that supplies clients such as J.C. Penney and Target. Referring to reports that intelligence agencies had predicted an attack, he adds, "[The government] was forewarned, so why didn't they act on it? We've been ravaged by terror attacks since 1993."

Anger at the government
In Mumbai, anger courses through the city. "How can I invest more in a city which does not protect me?" asks Abhay Mansukhani, who makes auto parts. Now he's tempted to relocate: He's holding off expanding his plant in north Mumbai as he contemplates a shift to Pune, 124 miles away.

Some executives, undeterred, are staying put. Gautam Patel, managing partner of Battery Ventures, was on a conference call when his window shattered from an explosion outside the Oberoi. He's furious with the government, but he's not budging: "Let's do something to get Bombay back on its feet," he says.

What concerns managers like Patel and Mansukhani is that the government they depend on for so much is so weak. The attacks of the past two years have made Prime Minister Manmohan Singh's administration appear incompetent. Inflation has eaten away at the meager gains of the poor, who in India vote far more reliably than the middle class. Promised reforms have either been checked by the necessities of coalition politics or stalled in the Kafkaesque bureaucracy called the Indian Administrative Service, which pretty much runs the country.

And the tentacles of the global credit crunch have spread into India's relatively well-capitalized banks, slowing economic growth to 7.6 percent this quarter from more than 9 percent earlier. Exports dropped 12.1 percent in October, versus a 51 percent jump in the same month last year. "It's a crisis situation," says Ananthasubramaniam Prasanna, chief economist at brokerage ICICI Securities. But he adds: "The focus now is on internal security and not fiscal policy." Worse, the prospect of a national election in April has reduced the government to lame-duck status.

Singh's government has promised swift action. At least three senior ministers, including one in charge of security, have quit. Singh has suggested creating a new agency that could react swiftly to an attack and increasing funds for commandoes.

Loyal tech clients
Yet if a conflict with Pakistan ensues, or bombings continue, or economic reforms remain frozen, or a government collapses — all things that have happened to India in the past 10 years — the euphoria could dissipate completely. "Fear of physical danger to employees, executives, and property can muddy the sentiment toward India," says Gunjan Bagla, author of "Doing Business in 21st Century India" and a consultant to U.S. companies in India. "To me the tipping point would be if foreign executives start to believe that the government is not willing to make changes to correct its inabilities."

Because India's economy is still a pidgin blend of Soviet-inspired socialism and entrepreneur-driven capitalism, business needs government to create a climate where investments can take root. In southern India, especially in Bangalore, strong governance and education helped create the $64 billion outsourcing industry almost entirely from scratch. On Dec. 2, Subramaniam Ramadorai, chief executive of Tata Consultancy Services, the top tech services outfit in India, left work to join a candlelight service for Mumbai's dead. Then it was back to business-almost-as-usual. "Our customers say they stand by us," he says. "Nobody has said they want to do less in India."

But in the northern states of Bihar and Uttar Pradesh, nearly 500 million people endure in an economic wasteland created by political turmoil, extreme corruption, India's highest crime rate, and its lowest per-capita income. Industry, local and foreign, has fled those states, or never dared venture there. Economic growth is less than half the national average. The people are among India's most illiterate, with a life expectancy worse than that of sub-Saharan Africans.

Not long ago, almost all of India resembled these two states. Even when reforms opened up much of the economy in 1991, real, measurable growth was held back for years as coalition governments collapsed, a border conflict with Pakistan threatened to spread, and scandals eroded faith in the financial markets. Only in 2001, when a stable government focused on the economy with a brand message called "India Shining," did things take off.

Which India will prevail — the India that nurtures global industries and rising affluence or the India of stalled hopes and endemic violence? A year ago the answer was clear: The new India would win. That is probably still true, but India now faces a struggle.

Terror in India: The Political Fallout Spreads

The investigation of the Mumbai terrorist attacks continues, but pressure is increasing for the Indian government to react forcefully.

The political fallout from the terrorist attacks in Mumbai is roiling India. As funeral pyres burned on live television and mass candlelit vigils turned into sober protests against the government's perceived intelligence failures and mishandling of the attacks that left as many as 175 people dead (BusinessWeek.com, 11/27/08), pressure mounted on the Indian government to react forcefully.

Tensions are rising with Pakistan, as Indian officials point to ties between the terrorists and forces inside India's longtime rival. In an off-the-record meeting with BusinessWeek and representatives of two newspapers, a senior official at India's Research & Analysis Wing, the country's equivalent of the CIA, shared transcripts of text messages and e-mails that were sent to the gunmen inside Mumbai's Taj hotel, where dozens of people were killed in a 60-hour siege. The messages, some in Urdu and purportedly from phone numbers registered inside Pakistan, included explicit military-style instructions to the gunmen to retreat to different wings of the hotel and referred to the gunmen as Team A and Team B. Some were congratulatory notes.

Because the Indian intelligence official did not allow reporters to make copies of the messages, BusinessWeek could not independently verify their authenticity. However, CNN-IBN, a TV channel, has broadcast call logs from satellite phones that include several phone calls to Karachi and Jalalabad, both in Pakistan.

India Inc. Reacts

Even as the investigation continues, India's business community is clamoring for quick and decisive action (BusinessWeek.com, 11/28/08). In Bangalore, which was the target of a smaller bombing last year, CEOs of outsourcing, IT, and biotech firms met with the state government and asked for, among other things, permission to arm their security guards with more than just handguns and nightsticks. India has strict gun-control laws. "Our security services are meant to protect property, not to protect lives," says Kiran Mazumdar Shaw, the chairman of Bangalore-based Biocon, India's largest biotechnology firm, who was at the meeting. "As employers, our employees are our responsibility. While the government does what it can, we have to do what we can."

With India's Congress-led coalition facing elections just months from now, the purging of leaders continued through the weekend and into Monday. There have already been four high-profile resignations at the state and national levels, including Shivraj Patil, the home minister in New Delhi. Other resignations include chief minister and deputy chief minister of the state of Maharashtra, of which Mumbai is the capital. More resignations, including those of the 75-year old National Security Adviser M.K. Narayanan, are still being considered by the government.

It's unclear whether that will be enough to quell rising anger, both public and private. When Patil, whose purview as Home Minister includes the Indian Police Service, offered to resign at a Saturday night meeting of the country's leadership, his offer was met with pin-drop silence. "Not even his oldest friends stood up to support him," said an official who was at the meeting but declined to be identified. "There was relief he offered to do it before anybody had to demand it."

Patil's successor is a name well-known in economic circles: Palaniappan Chidambaram, the Harvard-educated Finance Minister who helped usher in major reforms in the past few years. Over recent months he has been battling runaway inflation and a global financial crisis that has soured India's economic boom.

An Unappealing Job

Chidambaram's appointment is seen as an offering to India's business community, which has a great deal to lose during a period of political instability.

Jews Targeted in Mumbai

The Chabad House in Mumbai, where terrorists murdered the young rabbi, his wife and several others during last week’s attacks, is relatively new. Six years ago, the first time I spent a Shabbat in the city, there was no Chabad yet in Mumbai. There was the historic synagogue in the Fort area, down the street from the Sassoon Library, which is where I went to pray. It was an impressive old building, with a baby blue facade and a large but a bit dilapidated interior. (The Jewish community in Mumbai, the Bene Israel, had seen better days, as many people had left for Israel or elsewhere.)

On that Friday night, I was one of eight men - a problem because you need ten men to make a minyan, the quorum necessary to say kaddish and some other prayers. The situation seemed bleak, and then suddenly arrived a group of several dozen people from India’s northeast, home to a group called the Bnei Menashe that claims to be descendants from one of the Ten Lost Tribes.(The claim is not as strange as it sounds. See Hillel Halkin’s excellent book, “Across the Sabbath River: In Search of a Lost Tribe of Israel.”) They were on their way to Israel and were staying the weekend in Mumbai. Having received much of their formal Judaism education from Ashkenazim who help people claiming connections to the Jewish people through the Ten Lost Tribes, the visitors didn’t have much in common with the local Jews: The men wore white shirts, black trousers and wide-brimmed black hats, the standard uniform of haredim in Brooklyn or Jerusalem, not the secular Jews of Mumbai; the visitors also had different styles of singing some of the songs, since the Bnei Menashe had long lived in isolation and never had any connection to Jews in other parts of India. (At one point, one of the local Jews turned to me, a puzzled look on his face, looking for explanation from the American of what these newcomers were doing.) Still, our lonely group of eight men were thrilled to get the reinforcements. Our numbers bolstered, we gladly concluded the evening prayers.

Afterwards, I asked an old-timer about anti-semitism and whether a Jew wearing a kippah (yarmulke) needed to worry while walking the streets of the neighborhood. Of course not, he told me. This was Mumbai.

Last week, while the battles at the Taj and the Oberoi were still raging, reports circulated that the terrorists were singling out Americans and Britons to murder them. That seems not to have been true, according to Oberoi executive Rattan Keswani, quoted in the New York Times. But there’s no doubt the rabbi, the rebbetzin and the others in Chabad House were targeted because they were Jews. In the Times, Mumbai native and NYU professor Suketu Mehta writes, “And in the attack on the Chabad house, for the first time ever, it became dangerous to be Jewish in India.”

Indo-Pak Relations

s the focus shifts from Operation Black Tornado to the predictable bickering at home, Manmohan Singh faces an even bigger challenge on the diplomatic front. He has already pointed a finger at the militant groups operating in Pakistan and warned Islamabad that it will have to pay if it can't stop the extremists operating on its soil.

Yet another crisis in Indo-Pak relations is at hand. The prospects for its rapid regionalisation, to include Afghanistan, and inevitable internationalisation, involving the US and NATO, are now real.

India's friends will wonder - its enemies have already bet on the UPA government's weakness - whether Dr Singh has the strategic resolve for a new confrontation with Pakistan's armed forces and direct it towards a credible set of political objectives.The decision to replace Shivraj Patil with P. Chidambaram at the home ministry suggests that the UPA government may finally be ready to take major political decisions in confronting the national security crisis at hand.

Dr Singh knows one of the first principles of statecraft is not to issue threats that cannot be carried out. If he fails to act on his promise to raise the costs to Pakistan, the credibility of his government will sink even lower. The question is not whether India should act, but how.

In developing a response to the Mumbai aggression, Dr. Singh will have to review the military/nuclear crises with Islamabad over the last decade.

In 1999, when the NDA government led by Atal Bihari Vajpayee discovered the occupation of Kargil heights in Jammu and Kashmir by the Pakistan army, it had no option but to embark on a limited war to reclaim Indian territory. Vajpayee faced a more complicated situation during 2001. In its audacity and intended political consequences, the attack on the Indian Parliament on December 13, 2001 is the closest parallel to the Mumbai attacks last week.

After considering and ruling out immediate air strikes on terrorist camps across the border, and announcing a series of rather ineffective sanctions against Pakistan, Vajpayee turned to what was then called "coercive diplomacy". He ordered the full mobilisation of the Indian armed forces on the border and gathered the navy in the Arabian Sea.

India threatened to go to war with Pakistan, with all its consequences including nuclear, if Islamabad did not end cross-border terrorism. Analysts in India and abroad are divided over the effectiveness of India's coercive diplomacy during 2001-02. It nevertheless saw the US along with Britain exert pressure on Pakistan's president, General Pervez Musharraf, who agreed to end cross-border terrorism on a permanent basis.

Musharraf's promise became the eventual basis for the new peace process that was launched in January 2004. After Mumbai we are now back to square one, confronting the same dilemmas. The option of threatening a war and actually going to one must remain in Dr Singh's political quiver. Any decision to confront the Pakistan army, however, must be crafted with great care and take into account the significant differences in the political context between 2001 and 2008. Letting outrage and domestic posturing drive policy could make matters a lot worse for India.

One major difference between 2001 and 2008 is Pakistan's internal situation. Musharraf then was the unchallenged CEO of Pakistan. In contrast, Pakistan's power structure is fragmented today. While Pakistan's civilian leadership led by President Asif Ali Zardari has signaled its positive intent towards India, its security establishment has done the exact opposite.

In 1999 Indian policy-makers had to consider intelligence information that Musharraf may not have fully informed the civilian prime minister on the Kargil operations. This time, India will have to factor in the possibility that Pakistan's president and PM may have been in the dark about the planning and execution of the Mumbai aggression.

In their statements last week, Dr Singh and External Affairs Minister Pranab Mukherjee have been careful not to blame the Pakistani leadership for the Mumbai attacks. They, instead, pointed to "elements inside Pakistan". Zardari, in turn, has been definitive in his offer to act against any group in Pakistan, if it is shown to have links to the Mumbai aggression.

India's actions in the next few days must be sensitive to the internal divide in Pakistan. India's case that the Mumbai attacks are linked to groups operating in Pakistan must be strong enough to mobilise significant international pressure to test Zardari's offer to act against these groups and their patrons in the security establishment.

Unlike in 2001, India will also have to factor Afghanistan into the equation. Official reports from Islamabad suggest that Pakistan army is ready to shift its troops from the Afghan border to the east. Pakistan's army, never enthusiastic to join the US and NATO in the fight against the extremists on its western borderlands, is quite clearly eager to shift the political focus from Afghanistan to India.

It clearly hopes to leverage this threat with Washington at a time when the US and NATO desperately need the Pakistan army's cooperation to stabilise the deteriorating situation in Afghanistan. New Delhi's challenge, however, is to ensure that the current crisis will lead to lasting changes in Pakistan's policy to the benefit of both Afghanistan and India.

What Dr Singh needs now is a strategy that combines controlled escalation with flexible diplomacy to build an international coalition that includes the civilian leaders of Pakistan as well as the US and NATO. Handled right by New Delhi, this crisis may yet lead to a structural change on our north-western frontiers.

Mumbai's Hotels resumed working

An uneasy calm prevails now at the Oberoi/Trident hotel, days after terrorists attacked the premises and killed guests and staff.

Traffic movement has resumed outside the hotel and people have begun stroll in its vicinity, while workers are busy carrying out sanitation work inside.

The terrorists struck at the heart of Mumbai, the engine room of an economic boom that has made India a favorite emerging market.

It is also home to the "Bollywood" film industry, the epitome of glamor in a country blighted by poverty.

Meanwhile, commandos of the National Security Guard (NSG), who participated in the counter-terrorism operation in Mumbai, have returned to the Indian capital.

On Sunday, NSG Director-General J.K. Dutt and other senior commanders paid tribute and homage to colleagues -- Major Sandeep Unnikrishnan and commando Gajendra Singh -- who laid down their lives during the operation at the NSG headquarters in Manesar, Haryana.

"The operation at the Taj hotel, as you may be aware, lasted the longest, and there is a reason for that. The objective of the NSG (National Security Guards) was that on each and every scene, where we had to take control, apart from terrorists, was that at least from our side there should not be any casualty among the hotel staff, guests, or the persons who may be kept inside the hotel," said Dutt.

He further added that the operation was difficult because the Taj had huge columns, huge domes, high roof, number of corridors and passages, wide staircases, and it seemed these terrorists were quite conversant and familiar with lay out of the hotel.

"Whether they (terrorists) wanted to bring down the building, we have not found any explosive in that amount, which would cause such destruction. There have been a number of arms and ammunitions and grenades but with that you can't bring down the sturdy building like the Taj," he said.

"Yes, we found that other terrorists whom we have countered earlier, who seem to be the type, who probably, on a part of the operation, come out with may be ill-prepared and just learned how to shoot.

They came and have been given an objective, which they may or not achieve. But in this particular...they knew what they want to do. How to go about, that is they knew the tactics and the technology," he added.

Restoring Taj Mahal Palace and Tower Hotel's glory

The restoration of the century-old Taj Mahal Palace and Tower Hotel in downtown Mumbai that was considerably damaged during the terror siege could take as much as 12 months and cost about Rs.5 billion (Rs.500 crore/$100 million), experts on structural engineering and architecture say.

A sea-facing landmark of India's commercial capital, offering a panoramic view of the Arabian Sea and the majestic Gateway of India, the hotel was built in 1903, with its architecture blending Moorish, Oriental and Florentine styles.

Thus, the restoration, will take that much more time and cost more than conventional restorations, the experts said, adding the services of professional institutions like the Archaeological Survey of India (ASI) may also be required.

"The Taj is one of our oldest hotels and a heritage structure. So, any restoration work would take a minimum of a year. It is my estimate that it could cost somewhere around Rs.500 crore," said Pandurang Potnis, vice president of the Indian Institute of Architecture.

"You must understand that restoration work for such structures is a cumbersome process. It involves a detailed assessment of the damage with blueprints. Only then can the damaged structure be strengthened," he added.

"In India, this kind of technology is available with only a handful of institutions like the Archaeological Survey of India," Potnis, who also runs Bangalore-based architecture consultancy firm under his name, told IANS.

Visitors to the Taj Mahal Palace and Tower Hotel have come away in awe of its Indian influences, vaulted alabaster ceilings, onyx columns, archways, carpets and chandeliers, as also its collection of art and antique furniture.

Jamsetji N. Tata, the legendary founder of India's largest industrial house, built the 565-room hotel much before the Gateway of India was completed in 1928 to commemorate the visit of Britain's King George V and Queen Mary.

The grand property, which will also require some experienced artisans and workers to refurbish and restore, has hosted royalty, heads of states, corporate honchos and celebrities, among other guests in the past.

A.K. Nagpal, the head of the civil engineering department at the Indian Institute of Technology (IIT) here, also said that structural engineering was the trickiest part in restoration of damaged properties.

"We have undertaken such consulting projects in the past and provide advice to even private companies," added Nagpal, who specializes in areas like structural engineering and tall buildings.

Rajesh Thambi, who runs an architectural design firm Saving Catalyst here, said that if it takes a skilled person around five minutes to construct one sq ft of carpeted area, restoration would take anywhere between 45-50 minutes.

"I would say that the cost of restoration - it will take a lot of care while doing so - will be around Rs.1,500-Rs.2,000 per square feet."

The owners of the property, Indian Hotels Ltd., have said that they would take all measures to restore the Mumbai landmark and had an insurance policy against terror attacks.

"We are not just determined, but completely committed, to rebuilding the institution. We will restore it to its fullest glory," said company vice chairman R.K. Krishna Kumar.

"The loss of life is extremely distressing, as is seeing a building as unique as this destroyed. The entire top floor has gone up in flames, but as soon as the dust settles we will go out there and begin the rebuilding," Krishna Kumar added.

Armed terrorists who had seized the hotel for four days earlier this week had set deliberate parts of it on fire in a bid to damage it. The hotel suffered further damage when commandos had moved against the terrorists Friday-Saturday to wrest it back from them.

Tata Group chairman Ratan Tata visited the property Saturday with his management team to inspect the damage and discuss measures for the Taj Mahal Palace and Tower Hotel's restoration.

India to grow 7-8 pct in 2008 - 2009

India's economy will expand 7-8 percent in the year to March, former finance minister Palaniappan Chidambaram told reporters on Monday, describing this as "satisfactory."
India's economic growth declined to 7.6 percent for the second quarter of this fiscal, leaving industry with the hope that policy measures taken over the past month will avert a further fall and help revive manufacturing.

The country's growth was 7.9 percent during the first quarter of the fiscal (April-June) and 9.2 percent during the second quarter of 2007-08 (July-September), as per data on gross domestic product (GDP) released by the Central Statistical Organisation (CSO).

Prime Minister Manmohan Singh, Finance Minister P. Chidambaram and Reserve Bank of India (RBI) Governor D. Subbarao have projected the Indian economy to expand by 7-8 percent during the current fiscal year ending March 31, 2009.

The main reason for the fall in the overall economic expansion during the period under review (July-September, 2008) was a low, 5-percent growth in the manufacturing sector, as opposed to 9.2 percent in the like period of last fiscal.

Similarly, agriculture also logged a significantly lower growth of 2.7 percent, as opposed to 4.7 percent, while hospitality, transport and communications expanded the best 10.8 percent against 11 percent during the second quarter of fiscal 2007-08.

What has, however, come as a surprise was the 9.7 percent growth ion construction, as opposed to 11.8 percent in the corresponding period of the previous year.

Financial services, realty and business services also registered a notable growth of 9.2 percent, against 12.4 percent, given the circumstances where real estate companies have been complaining about a major slowdown.

"Economic slowdown in India has been on since June. The real impact of global economic slowdown on the Indian economy will be actually felt in third and fourth quarters," said Sri Ram Khanna, professor and head of department in Delhi School of Economics.

Dalip Kumar, head of projects at the National Council for Applied Economics Research (NCAER), an economic think-tank, said economic depression in US had begun showing its impact on the overall industrial growth in India.

"Our industrial growth has been hit and would continue to deteriorate further next year. This has largely contributed to the downfall of India's economic growth," Kumar told IANS.

The Associated Chambers of Commerce and Industry (Assocham) said that the 7.6 percent growth was satisfactory given the circumstances and expressed confidence that the same would be maintained in the remaining months of the current fiscal.

"Slowly and gradually, interest rates, inflation and input costs are falling down whose collective reflection will fall on the overall growth of GDP," the chamber's president Sajjan Jindal said in a statement.

Another industry lobby, PHD Chamber of Commerce and Industry, presented a somewhat different picture. "The slowdown in is shows that our economic indicators have started weakening with some segments being affected more than others," the chamber said.

"Investment in infrastructure should be increased and an early completion of ongoing projects be effected on a war footing. Attention should be paid on building rural infrastructure to rejuvenate demand in the countryside."

India's economy is expected to expand about 7 percent in 2008 and 2009 before recovering to above 8 percent in 2010 as world growth picks up, the Organisation for Economic Cooperation and Development (OECD) said on Tuesday.

In its economic outlook it said the inflation peak in India seemed to have passed, reflecting a sharp deceleration in prices of metals and petroleum, and going forward all indicators of inflation were expected to ease.

India's economy, which is Asia's third largest, has grown at 9 percent or more in the past three fiscal years but a top official said on Tuesday it was preparing for growth as low as 7 percent in the fiscal year ending March 2009.

'The economy is projected to slow further over the next year and to recover in tandem with the world economy in 2010,' the OECD said.

It said a decline in inflation, which touched an annual rate of almost 13 percent in August, could help restore confidence in the economy more rapidly and support demand and activity.

Annual inflation, as measured by wholesale prices, eased to 8.90 percent in early November.

Constraints imposed by a fiscal reponsibility law had led to soaring off-budget spending and the consolidated fiscal deficit, including off-budget items, would be 10 percent of GDP in fiscal 2008/09, the OECD said.

'A period of fiscal retrenchment seems desirable, focused on making government subsidies available only to those in real need,' it said.

The Indian rupee hit a record low of 50.60 per dollar on Nov. 20 and the OECD said pressure on the currency may limit room for further interest rate cuts 'so that the real rates facing consumers and firms will rise markedly, weighing on domestic demand'.

The central bank has cut 150 basis points from its key lending rate since the global credit crisis spilled over into India's markets in September and October. The key lending rate stands at 7.5 percent.

The BSE Sensex rose more than 2 percent

The BSE Sensex rose more than 2 percent on Monday as investors welcomed a reshuffle of key government posts after last week's deadly attacks on Mumbai, with Prime Minister Manmohan Singh taking on the finance portfolio.

Singh, who has served as finance minister and central bank governor in the past, will take over finance from Palaniappan Chidambaram, who becomes home minister following the resignation of Shivraj Patil.

"I think RBI will have a greater role now. Finance ministry's interference will be less as PM's hands are full. It will be more of a professional approach than a political approach," said R.K.

Gupta, managing director of Taurus Mutual Fund in New Delhi.

"PM is more keen on growth than inflation. For supporting growth, a rate cut is likely," he said.

Most banking stocks rose expectations the central bank would soon cut interest rates to shore up confidence and growth.

Sector leader State Bank of India rose 2.3 percent to 1,112 rupees and HDFC Bank rose 4 percent to 957.00 rupees, but ICICI Bank was down 1.45 percent

Reliance Industries, India's most valuable listed firm, contributed most to the gains. It was up 2.3 percent at 1,157.60 rupees.

At 11.26 a.m., the 30-share BSE index was up 1.99 percent at 9,273.48 points, with 26 components gaining, having risen as much as 2.6 percent in morning deals.

In the broader market 1,220 gainers outpaced 625 losers on modest volume of 68 million shares.

Leading passenger car marker Maruti Suzuki was down 3 percent at 517 rupees after its November vehicle sales fell 24.4 percent from a year earlier.

Other automakers also fell on a weak outlook for the sector, with Mahindra & Mahindra down 4.2 percent at 269.70 rupees.

The 50-share NSE index was up 2.24 percent at 2,816.80 points.

STOCKS ON THE MOVE

* Electronic communications systems maker Astra Microwave rose 8.7 percent to 44.50 rupees after it received orders worth 570 million rupees from Israel's ELTA Systems.

* India Infoline Ltd rose 4.2 percent to 37.40 rupees after its board approved buyback of equity shares at 43.20 rupees per share.

MAIN TOP 3 BY VOLUME

* Unitech on 7.2 million shares

* ITC on 5.1 million shares

* GVK Power & Infrastructure on 3.6 million shares

Citibank writes to customers

Citibank writes to customers reinforce customer confidence in the bank.

Global banking giant Citibank is now following the footsteps of the private sector ICICI Bank In an elaborate mail to all its customers, Citibank's N.Rajashekaran, country business manager, global consumer group has tried to ease the rising concern of all depositors and account holders by giving a detailed picture on the bank's current financial situation. "With the recent and unprecedented volatility in the world's financial market, I thought I would write to you about Citi's financial strength and our commitment to serve all of your financial needs," the mail read.

While a Citibank spokesperson said that it is business as usual for its India, clearly things are not going right for the bank. "The mail is an attempt to reinforce customer confidence in the bank," a banking source said.

In the last week, Citigroups's stock price fell by about 60 per cent to touch a low of $3.77, following reports of rising bad assets and its subsequent announcement to cut jobs globally. There have been several job cuts in India as well.

Former south Asia chief executive officer Sanjay Nayar too decided to exit Citigroup at a time when the bank is grappling with several problems.

More funds for banks in India

The Reserve Bank of India on Friday said it would conduct a special 14-day repo auction at 7.5 per cent for Rs. 55,700 crore ($11.2 billion).

The reversal of the auction will take place on December 12, it said in a statement. The measure was announced with a view to enabling banks to meet the liquidity requirements of mutual funds (MFs) and non-banking financial companies (NBFCs) either on incremental or on rollover basis.

It may be recalled that the Reserve Bank of India had announced earlier that it would conduct the special fixed rate term repo under liquidity adjustment facility every day till the end of March, 2009, up to a cumulative amount of Rs 60,000 crore, on outstanding basis. Authorities, stung by the rising rubble of the credit crisis and worsening growth outlook, have infused over Rs 200,000 crore into the system through various measures.

The Reserve Bank of India (RBI) has cut the cash reserve ratio-proportion of money banks have to park with the RBI-by 3.5 percentage points to 5.5 per cent releasing about Rs 1,40,000 crore into the system. The repo rate-the rate at which banks borrow from the RBI-has also been cut by 1.5 percentage points to 7.5 per cent.

Officials did not rule another 0.50 percentage point in the coming days to reduce borrowing costs for banks and industry. Most banks have reduced their lending rates recently by about 0.75 percentage points, but analysts felt there was scope for further easing.

Stocks end week with gains despite terror attack

After shedding values for two consecutive weeks, Indian equities markets ended with gains the week Friday, with a key index up 1.99 percent over its value Friday the previous week.

The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) finished Friday at 9,092.72, up 177.51 points or 1.99 percent from its close previous Friday at 8,915.21 points.

The broader-based 50-share S&P CNX Nifty of the National Stock Exchange (NSE), also finished the week in the green at 2,755.10, up 61.65 points or 2.29 percent from the previous Friday's close at 2,693.45 points.

The BSE midcap, however, finished with marginal losses this week at 2,885.76, down 30.9 points or 1.05 percent from the previous week's close at 2,916.66 points.

The BSE smallcap, too, ended with marginal losses at 3,304.61, down 86.15 points or 2.54 percent from the previous week's close at 3,390.76 points.

'The weekly trend for the last four weeks shows that probably the market has hit the bottom and is trading in a range-bound way, continuously testing the 9,000-mark,' said Ashish Kapoor, chief executive officer of Delhi-based financial services firm Invest Shoppe India.

The week opened with losses as the Sensex finished Monday at 8,903.12, down 12.09 points or 0.14 percent from the previous week's close at 8,915.21 points.

The Nifty finished in the green at 2708.25, up 14.8 points or 0.90 percent from its previous close last Friday at 2,693.45 points.

Despite several attempts by bulls to push up values and the Sensex going into positive territory several times during the day, bears ultimately prevailed Tuesday and the Sensex finished at 8,695.53, down 207.59 points or 2.33 percent from Monday's close at 8,903.12 points.

The Nifty also showed similar volatility and closed at 2638.65, down 69.6 points or 2.57 percent from the day's close at 2708.25 points.

Wednesday, however, saw the Sensex end above the psychologically important 9,000-mark after being below that mark for several consecutive sessions.

The Sensex finished Wednesday at 9,026.72, up 331.19 points or 3.81 percent from its previous close Tuesday at 8,695.53 points.

The Nifty also showed a similar trend and finished at 2,752.25, up 98.25 points or 3.7 percent from Tuesday's close at 2638.65 points.

The BSE midcap finished at 2,877.38, up 4.79 points or 0.17 percent from Tuesday's close at 2,872.59 points.

The BSE smallcap, however, finished in the red at 3,314.89, down 18.53 points or 0.56 percent from its previous close at 3,333.42 points.

From Wednesday night, the city came under terrorist attacks, and trading was suspended Thursday. When markets reopened Friday, Indian investors once again proved they were not going to be intimidated by mindless terrorism.

Friday saw the markets end with gains, albeit marginal. The Sensex finished at 9,092.72, up 66 points or 0.73 percent from its previous close at 9,026.72 points.

'It was a terrific day of resilience,' said Jagannadham Thunuguntla, director of the country's fourth largest share brokerage house, the SMC Group.

The Nifty too closed higher at 2,755.1, up 2.85 points or 0.1 percent from its previous close at 2,752.25 points.

The Sensex opened lower at 8,889.18 and despite showing some volatility within a narrow range, clearly displayed the same underlying Indian investors' resilience by soon moving into the positive zone to hit an intra-day high of 9,157.62, more than 130 points higher than the previous close, and then finally ended at its closing value.

Hotel stocks tumble

Hotel stocks tumble as earnings mood slumps

The terror strikes in two leading hotels of Mumbai found reverberations in the bourses. The share prices of Indian Hotels that runs the Taj chain of hotels fell by 17 per cent on Friday, while East India Hotels' (EIH) fell by 10 per cent during the day before staging a smart recovery to close the day with a gain of 5.2 per cent.

The attack attracted widespread attention from the India Inc and most of the business leaders and experts have suggested that this will have an impact on the tourism industry and the business trips, which will impact the hotel industry and its revenues. "The hotel industry was at the beginning of the tourist season and an event like this will impact the tourist flow and will impact the hotels business for the financial year 2008-09," said gaurav Dua, head of research, Sharekhan.

Analysts said the companies' share prices are likely to remain under pressure.

The meltdown-hit travel trade and hospitality industry will have to weather another storm, thanks to the terrorists's siege of two hotels in Mumbai since Wednesday night. But industry watchers and captains predict that it will only be a short-term assault on business.

The terrorists scoped out iconic hospitality landmarks like the Taj Mahal Palace and Tower Hotel and the Oberoi Trident in the country's financial capital unlike previous attacks - sparking fears that the tourism and hospitality sectors will have to grapple with the crippling blow over a long period.

'The situation is almost like 9/11,' Anil Bhandari, former chairman-cum-managing director of the Indian Tourism Development Corp (ITDC), told IANS.

'Obviously, people will not like to travel. But domestic travellers will be around,' he said.

'Cancellations of overseas bookings have already started. The fate of travel trade and hospitality business now depends on how we send the message across that everything is normal. Several countries have already issued advisories against travelling to India,' Bhandari said.

India, explained Mumbai-based Sunil Gupta, the chief operating officer of travel majors SOTC and Kuoni Group, is a complicated destination because of the size of the country and the multitude tourism circuits.

'Tourists book in advance. I think the attack will affect holiday bookings for February and March. People coming to India will avoid Mumbai. The fact that Delhi has the largest inbound airport will help travellers reschedule their itineraries,' Gupta told IANS from Mumbai.

'It is the last straw on the camel's back.'

Since North America and Europe, the two largest inbound tourists contributors to India, are fighting economic slowdown, bookings have already borne the brunt. 'The attacks have only made it worse,' Gupta said.

However, he said the silver lining was winter - especially Christmas - is always a subdued season for inbound travel and trade. 'People in the West want to celebrate Christmas with their families. That might cushion the impact.'

The SOTC kept its South Mumbai offices closed for the past two days. Bookings will resume Monday.

Sources at Cox & Kings said it was a 'wait-and-watch situation'. 'It is too early to speculate the impact,' a senior Cox & Kings official said.

Owner of restaurant chain Moti Mahal and the author of the Moti Mahal Cookbook Manish Gujral is concerned about the impact of the attack on his business.

Gujral's eatery chain has properties spread across the country, including Mumbai.

'The Moti Mahal restaurant in Mumbai is located next to the Oberoi at the Inox Mall. It has been closed for the past two days. On the night of the attack, the employees were trapped inside the premises. I am worried about the impact on my business,' Gujral told IANS.

'Why are our police not equipped to battle terror?' he said, arguing that if the country was unable to provide security to its people and ensure a safety along the border, it was not possible for hotels to protect individual customers.

There is a very perverse logic to terror, said travel trade and hospitality writer Bhisham Manshukhani, associated with Paprika Media owned by the Essar Group. 'People forget and Mumbai has the ability to recover. It can reduce the damage,' Mansukhani said.

According to him, domestic tourists will remain. 'But it will take time for foreign travelers to return. Add to it the recession. Hotels are going to see a major crash in the short term,' he said.

Indian Forces Comb Taj Mahal Hotel as Shooting, Blasts Subside

Indian forces combed a hotel in Mumbai looking for remaining militants and hostages as fighting subsided about 60 hours after attacks on the country’s commercial capital that left about 160 people dead.

Two blasts were heard inside the Taj Mahal Palace and Tower Hotel after the National Security Guard said in a public announcement it would set off controlled explosions. Firemen who were putting out a blaze that started shortly after daybreak pulled back from the building.

Busloads of commandoes moved in earlier to do a room-by- room search after gunshots and blasts that had rocked the building in the early hours of today subsided. The siege on the hotel is over, Press Trust of India said in a news flash. The NSG said it wasn’t declaring an end to the crisis until all rooms at the Taj Mahal hotel were searched.

Three militants were killed at the hotel, said J.K. Dutt, director general of NSG commando unit at a briefing, adding some guests may still be in the complex. The death toll was at 160 after the attacks on 10 sites in the city and 11 militants were killed, CNN said before the NSG briefing.

The Indian government said earlier at least 370 were injured as the attackers moved through India’s financial hub, targeting the Oberoi-Trident hotel complex, the Taj Mahal, a railroad station and a restaurant and a Jewish center.

Most of those who died were Indians and a final death toll hasn’t been officially released. Five Americans died in the attacks, the U.S. State Department said in a statement. More U.S. citizens are missing.

Claiming Responsibility

A German, two Australians, two Frenchmen, a Briton, a Japanese, a Canadian, a Singaporean and an Italian were among the dead, the Associated Press said yesterday.

Two rabbis from New York were among five hostages and two attackers who died at the Jewish Chabad-Lubavitch Center in Mumbai when it was stormed by Indian commandos.

A little-known Islamist group, the Deccan Mujahedeen, claimed responsibility for the shootings and explosions across the western coastal city, Indian Home Ministry official M.L. Kumawat said.

The attackers began planning their assaults six months ago, India’s NDTV reported, citing an account from a captured terrorist. A seized global positioning system showed some of the group left Karachi, Pakistan, as early as Nov. 12, NDTV said.

The attackers were familiar with their targets and had probably done surveys in advance, a leader of Indian commandos said yesterday in a video on the Times of India Web site.

“We came up against highly motivated terrorists,” Vice- Admiral J.S. Bedi, whose commandos led the assault against the militants, said in televised comments. He showed pictures of recovered hand grenades, tear-gas shells and AK-47 ammunition.

Multiple attacks have hit cities in India, which is mostly Hindu, with bombs planted in markets, theaters and near mosques this year, leaving more than 300 people dead.

India will “go after” individuals and organizations behind the attacks, which were “well-planned with external linkages,” Prime Minister Manmohan Singh said in a televised address, without identifying nations.

Request Rebuffed

Pakistan’s government turned down India’s request to send the chief of the military intelligence agency to investigate the Mumbai terror attacks, CNN-IBN television reported today.

Pakistani President Asif Ali Zardari said earlier he will send the intelligence head to India for the first time to counter claims that the attackers are linked to his country.

Pakistan’s “government will cooperate with India in exposing and apprehending the culprits and the masterminds behind” the Mumbai terrorist attacks, according to a statement by the president’s office, citing Zardari’s phone conversation yesterday with Singh.

The attacks in Mumbai show a militant movement among Indian-born followers of Islam is aligning its campaign with those from majority-Muslim countries, while seeking to hit economic interests, B. Raman, the former counterterrorism director of India’s intelligence agency, said in a telephone interview yesterday.

India’s Economic Future

The terrorist siege in southern Mumbai, not far from its financial district, is likely to threaten India’s already murky economic future and thwart plans to transform the city into a regional financial center, economists and investors said.

India’s economy had already been slowing significantly, because of the global credit crunch and the rupee’s decline. The country’s leading stock market index, the Sensex, has been cut in half since January as foreign investors redirected billions of dollars out of the country. Real estate markets around the country are cooling off.

Now foreign investors and business executives, who fueled much of India’s blistering growth over the past three years, are expected to be even more cautious about investing in India, at least in the short run, analysts said. Local companies and executives, who have already put the brakes on growth projections, could revise them further.

“Of course there will be some setbacks” related to the attacks, said Hitesh Kuvelkar, associate director at First Global, a financial research firm. Even before the attacks, First Global predicted that India’s economic growth could slow to about 6 percent in 2009 and less than 4 percent in 2010.

The attacks, which left more than 150 people dead by Friday evening, made targets of foreigners, witnesses said. The heavily armed terrorists were able to bypass security at two of India’s most expensive hotels, and it has taken India’s military several days to quell the violence, raising questions about safety in even the most exclusive locations.

It may be some time before the hotels, the Taj Mahal Palace and Tower and the Oberoi, once regular haunts for executives, become deal-making hubs again. “I would not feel comfortable either staying in or going to meetings at the Taj or the Oberoi, at least in the near future,” said Joel Perlman, the president of Copal Partners, a research company.

Officials from India’s Finance Ministry and its stock exchanges have long promoted Mumbai’s potential as a major international financial center, but outsiders have been skeptical of that ambition. New glass office towers in northern Mumbai house some of the world’s largest banks not far from impoverished neighborhoods; there is a shortage of housing for business executives; and basics like public transportation are either overcrowded or inconvenient.

The international financial crisis and growing fears of terrorism could delay plans for Mumbai’s continued growth for years.

Tourism, which employs 20 million people throughout India, is sure to slow down, at least temporarily. “Tourists tend to be fickle and nervous,” said Matthew Brooks, the head of industry analysis at Business Monitor International, a research firm that specializes in emerging markets.

Even as India has emerged as an economic, political and cultural power in recent years, it has endured a steady increase in terrorist attacks. Since January 2004, more people have been killed in India in terrorist attacks than in any other country except Iraq, according to Political and Economic Risk Consultancy, which is based in Hong Kong.

Kamal Nath, India’s minister of commerce and industry, said in a telephone interview that he did not expect the attacks to have any lasting effect on the Indian economy, because, he argued, international investors have accepted that there is some risk of terrorism almost anywhere.

Others are not so sure. “If you have a situation where terrorism becomes endemic, that’s a more serious problem,” Mr. Brooks said.

The government will no doubt try to convince software company executives, bankers and other businesspeople that India remains a safe and attractive place to do business. “We are going to reassure people that this is an absolute exception and not the rule,” Mr. Nath said. “It’s not something that’s taken lightly by the government.”

Many people compared the Mumbai attacks to the attacks on the World Trade Center in 2001. After all, Mr. Perlman, of Copal Partners, said, New York “still retained its position as the main financial center in North America and the world.”

Interest rates in India have to come down by another 2-3 percentage points in order to stimulate demand in the economy, ICICI Bank chief K.V. Kamath said on Tuesday.

The Reserve Bank of India has taken a string of measures over the past few weeks to improve liquidity and boost growth, cutting its key lending rate -- the repo -- by 150 basis points to 7.5 percent and lowering banks' reserve requirements.

Interest rates in India have to come down by another 2-3 percentage points in order to stimulate demand in the economy, ICICI Bank chief K.V. Kamath said on Tuesday.

The Reserve Bank of India has taken a string of measures over the past few weeks to improve liquidity and boost growth, cutting its key lending rate -- the repo -- by 150 basis points to 7.5 percent and lowering banks' reserve requirements.

The economic slowdown is now visible in numbers. India's gross domestic product (GDP) clocked a 7.6 per cent growth in the second quarter of the current fiscal year compared with the same quarter of 2007/08, largely buoyed by a strong performance of construction and services, but low growth in agriculture and manufacturing was a matter of concern.

The growth rate in the July-September period was slower than the previous quarter's 7.9 per cent, while the half-yearly growth stood at 7.8 per cent. The quarterly GDP growth was the lowest since the last quarter of 2004.

Finance Minister P Chidambaram described the growth rate as during the first half of 2008-09 as "healthy and satisfactory" in the worldwide context, where many economies are shrinking in a recession. "The first half growth rate at 7.8 per cent is a satisfactory and a healthy growth rate with regard to the global slowdown," he said, but admitted that the manufacturing sector was a problem area.

The government was also looking into the issues of certain sectors such as textiles, gems and jewellery, he added. Policy-makers are grappling with options to boost exports amid shrinking order-books resulting from the worst financial meltdown in the world in 80 years.

The country's exports are projected to decline by 15 per cent in October this fiscal, for the first time in any month in five years, and likely to miss the $200 billion target for 2008-09. According to the Apparel Export Promotion Council (AEPC) exports of readymade garments from India tumbled by 6.6 per cent in September over the same month last year.

The US accounted for about 13 per cent of India's exports totalling $158 billion in 2007/08. Indian companies, beset by low volumes and high borrowing costs, have sought fiscal and monetary policy measures to boost demand in the economy.

"The manufacturing sector has slowed down and this sector needs to be pepped up. The other area that requires immediate attention is construction where the slippage in growth has been the steepest," Federation of Indian Chambers of Commerce and Industry (Ficci) said in a statement.

Tourist Heaven Under Attack

MUMBAI, India (27-Oct-2008) — Coordinated terrorist attacks struck the heart of Mumbai, India’s commercial capital, on Wednesday night, killing dozens in machine-gun and grenade assaults on at least two five-star hotels, the city’s largest train station, a Jewish center, a movie theater and a hospital.

Even by the standards of terrorism in India, which has suffered a rising number of attacks this year, the assaults were particularly brazen in scale and execution. The attackers used boats to reach the urban peninsula where they hit, and their targets were sites popular with tourists.

The Mumbai police said Thursday that the attacks killed at least 101 people and wounded at least 250. Guests who had escaped the hotels told television stations that the attackers were taking hostages, singling out Americans and Britons.

A previously unknown group claimed responsibility, though that claim could not be confirmed. It remained unclear whether there was any link to outside terrorist groups.

Gunfire and explosions rang out into the morning.

Hours after the assaults began, the landmark Taj Mahal Palace & Tower Hotel, next to the famed waterfront monument the Gateway of India, was in flames.

Guests banged on the windows of the upper floors as firefighters worked to rescue them.

Fire also raged inside the luxurious Oberoi Hotel, according to the police. A militant hidden in the Oberoi told India TV on Thursday morning that seven attackers were holding hostages there.

“We want all mujahedeen held in India released, and only after that we will release the people,” he said.Some guests, including two members of the European Parliament who were visiting as part of a trade delegation, remained in hiding in the hotels, making desperate cellphone calls, some of them to television stations, describing their ordeal.

Alex Chamberlain, a British citizen who was dining at the Oberoi, told Sky News television that a gunman had ushered 30 or 40 people from the restaurant into a stairway and, speaking in Hindi or Urdu, ordered them to put up their hands.

“They were talking about British and Americans specifically,” he said. “There was an Italian guy, who, you know, they said, ‘Where are you from?’ and he said he’s from Italy, and they said, ‘Fine,’ and they left him alone.”

Sajjad Karim, 38, a British member of the European Parliament, told Sky News: “A gunman just stood there spraying bullets around, right next to me.”

Before his phone went dead, Mr. Karim added: “I managed to turn away and I ran into the hotel kitchen and then we were shunted into a restaurant in the basement. We are now in the dark in this room, and we have barricaded all the doors. It’s really bad.”

Attackers had also entered Cama and Albless Hospital, according to Indian television reports, and struck Nariman House, which is home to the city’s Chabad-Lubavitch center.

A spokesman for the Lubavitch movement in New York, Rabbi Zalman Shmotkin, told the Associated Press that attackers “stormed the Chabad house” in Mumbai.

Israel’s Foreign Ministry said it was trying to locate an unspecified number of Israelis missing in Mumbai, according to Haaretz.com, the Web site of an Israeli newspaper.

Several high-ranking law enforcement officials, including the chief of the antiterrorism squad and a commissioner of police, were reported killed.

The military was quickly called in to assist the police.

Hospitals in Mumbai, a city of more than 12 million that was formerly called Bombay, have appealed for blood donations. As a sense of crisis gripped much of the city, schools, colleges and the stock exchange were closed Thursday.

Vilasrao Deshmukh, the chief minister for Maharashtra State, where Mumbai is, told the CNN-IBN station that the attacks hit five to seven targets, concentrated in the southern tip of the city, known as Colaba and Nariman Point. But even hours after the attacks began, the full scope of the assaults was unclear.

Unlike previous attacks in India this year, which consisted of anonymously planted bombs, the assailants on Wednesday night were spectacularly well-armed and very confrontational. In some cases, said the state’s highest-ranking police official, A. N. Roy, the attackers opened fire and disappeared.

Indian officials said the police had killed six of the suspected attackers and captured nine.

A group calling itself the Deccan Mujahedeen said it had carried out the attacks. It was not known who the group is or whether the claim was real.

Around midnight, more than two hours after the series of attacks began, television images from near the historic Metro Cinema showed journalists and bystanders ducking for cover as gunshots rang out. The charred shell of a car lay in front of Chhatrapati Shivaji Terminus, formerly Victoria Terminus, the mammoth railway station. A nearby gas station was blown up.

The landmark Leopold Café, a favorite tourist spot, was also hit.

Reached by phone, some guests who had been trapped in the Taj Mahal Palace & Tower Hotel said about 1 a.m. that they had heard an explosion and gunfire in the old wing of the hotel.

A 31-year-old man who was in the Taj Mahal Palace & Tower Hotel attending a friend’s wedding reception said he was getting a drink around 9:45 p.m. when he heard something like firecrackers — “loud bursts” interspersed with what sounded like machine-gun fire.

A window of the banquet hall shattered, and guests scattered under tables and were quickly escorted to another room, he said. No one was allowed to leave.

Just before 1 a.m., another loud explosion rang out, and then another about a half-hour later, the man said.

At 6 a.m., he said that when the guests tried to leave the room early Thursday, gunmen opened fire. One person was shot.

The man’s friend, the groom, was two floors above, in the old wing of the hotel, trapped in a room with his bride. One explosion, he said, took the door off its hinges. He blocked it with a table.

Then came another blast, and gunfire rang out throughout the night. He did not want to be identified, for fear of being tracked down.

Rakesh Patel, a British businessman who escaped the Taj Mahal Palace & Tower Hotel, told a television station that two young men armed with a rifle and a machine gun took 15 hostages, forcing them to the roof.

The gunmen, dressed in jeans and T-shirts, “were saying they wanted anyone with British or American passports,” Mr. Patel said.

He and four others managed to slip away in the confusion and smoke of the upper floors, he said. He said he did not know the fate of the remaining hostages.

Clarence Rich Diffenderffer, of Wilmington, Del., said after dinner at the hotel he headed to the business center on the fifth floor.

“A man in a hood with an AK-47 came running down the hall,” shooting and throwing four grenades, Mr. Diffenderffer said. “I, needless to say, beat it back to my room and locked it, and double-locked it, and put the bureau up against the door.”

Mr. Diffenderffer said he was rescued hours later, at 6:30 a.m., by a cherrypicker.

Among those apparently trapped at the Oberoi were executives and board members of Hindustan Unilever, part of the multinational corporate giant, The Times of India reported.

Indian military forces arrived outside the Oberoi at 2 a.m., and some 100 officers from the central government’s Rapid Action Force, an elite police unit, entered later.

CNN-IBN reported the sounds of gunfire from the hotel just after the police contingent went in.

The Bush administration condemned the attacks, as did President-elect Barack Obama’s transition team. The White House said it was still “assessing the hostage situation.”