Tech Mahindra Ltd, an Indian telecom software services firm and a part of Indian automobile group Mahindra & Mahindra Ltd, has won the largest outsourcing contract for Indian IT services companies. It has signed a 5-year deal with BT Group Plc, the largest phone company of Britain, for providing strategic outsourcing services.Tech Mahindra expects to receive additional revenue in excess of $1 billion from this contract during this period. BT Group is also the joint venture partner in Tech Mahindra with about 36% shareholding. 

Tech Mahindra has already worked with BT Group for a range of projects in the last 20 years. Under the new agreement, Tech Mahindra will support BT's planned growth of managed services to business customers around the globe. It will continue to provide ongoing services related to BT'’s internal systems, processes and re-usable platforms. It expects the revenue from the $1 billion contract to start flowing in from April 2007 onwards. The work will gather momentum from second year. 

Earlier, in October 2005, India’s largest IT services company Tata Consultancy Services (TCS) had won $850 million contract from Pearl Group, the second largest firm in the U.K. life and pensions industry. 

India is set to surpass China as the fastest growing economy in Asia next year, as forecasted by global financial services firm Credit Suisse Group, headquartered in Zürich, Switzerland. It has cited increasing consumer demand and public investment in infrastructure as the major reason for this development. For 2007, the Indian economy is expected to grow at 10% compared to its earlier projection of 8.5%, and become the top growth performer in the region moving ahead of China. In the year 2008, the growth will accelerate to 10.5%, says the report. In the December 2006 report, Credit Suisse has estimated the growth in the Indian economy in 2006 at 9.5%, which is higher then its previous projection at 8.5% in September 2006. The growth of the Chinese economy has been pegged at 10.4% in 2006 and 9.9% in 2007. 

Confederation of Indian Industries (CII), the premier industry chamber of India representing more than 90,000 Indian companied directly or indirectly, has also upgraded the growth forecast for Indian economy to 8.6% in the financial year 2006-07 (ending in March 2007) from its earlier prediction of 8%. The main thrust for the growth during the first half of 2006-07 (H1’07) is both industry and services. Industrial growth was around 10.3% in H1’07 compared to 7.8% in H1’06, while services improved to 10.9% in H1’07 from 10.3% in H1’06. The trend is likely to continue with industries growing up to 9.1% in the second half (H2’07) though there could be a slight slowdown in the services sector to around 9.7%. As a result the overall growth for H2’07 will be around 8.2% compared to H2’06, says the industry body. 

Indian Prime Minister, Dr. Manmohan Singh’s visit to Japan has brought a new high in India-Japan relations in both political and business areas. The two big economies of Asia have agreed to begin negotiations on a comprehensive economic partnership agreement. The two countries expect to conclude it in another two years. Dr. Singh was on a 4-day visit to Japan that ended on December 16, 2006. 

Till now Japan-India trade was only $6 billion compared to Indo-China trade of $20 billion and China-Japan of $184 billion. India ranks 26th on Japan’s export destination while Japan ranks 10th on India’s export destinations. The fact that only 2.5% of the total Indian exports are for Japan indicates there is ample scope for improvement.

The current Indo-Japan trade is concentrated in a very narrow range of products with mainly raw materials and minerals exported to Japan and highly sophisticated and knowledge intensive manufactured goods imported by India. This is likely to improve as a result of the PM’s visit with increased cooperation between business leaders from both sides.

Japan’s current investments of $2.1 billion in India are expected to increase further. The potential for Japanese investments include the promotion of the Delhi-Mumbai (the national capital and financial capital of India respectively) industrial corridor, supported by a freight corridor along the same route, setting up of special economic zones (SEZs) in India and improving business interaction by setting up a Business Leaders Group comprising of 10 business leaders from each country.

Foreign direct investment (FDI) in India has more than doubled during the first seven months of the fiscal year 2006-07. The country has attracted FDI worth $6.1 billion during April-October 2006 compared to $2.6 billion in the same period last year, showing a growth of 134%. The month of October this year was much buoyant, as it recorded FDI inflow worth $1.7 billion, more than four times compared with $412 million in October 2005. The top investor countries are Mauritius, Netherlands, the U.S. and Cyprus. Some of the major sectors receiving foreign investments are Services, Electrical Equipment, Cement & Gypsum, Drugs & Pharmaceuticals and Hotel & Tourism.

On the other hand, Indian exports have also increased significantly, according to the latest figures for November 2006. Country’s exports were up 33.6% to $9.68 billion in November 2006, compared to $7.24 billion in the same month last year. The Indian government is confident of exceeding the annual target of $125 billion for 2006-07. Exports during the first eight months of the fiscal year 2006-07 stood at $79.59 billion, up 24% from $64.17 billion in April-November 2005.

India is trying to accelerate its gross domestic product (GDP) growth rate to 10% in the coming years from the current level of 8%. The approach to the 11th Five Year Plan (2007-08 to 2011-12) was recently approved by the National Development Council headed by the Prime Minister Dr. Manmohan Singh, who has outlined an initiative on how to achieve an average 9% growth during the initial years of Plan and reach at 10% growth in the fifth year. According to the PM, this is achievable given that the last three years have shown a sustained growth of 8%. The economy is much better placed and saving rate of the economy has increased to 29% in 2004-05 and investment rate to 31% of GDP. Foreign direct investment (FDI) is buoyant and Indian companies have matured to increasing competition and ventured confidently in the global market to meet challenges. Fiscal position has improved and measures have been initiated to contain inflation within 5%.

The 11th Plan proposes to give special emphasis to upliftment of agriculture which has been lagging with an annual growth rate of less than 2% for a long time. The steps for corrective actions include better water management, irrigation improvement and water conservation. The government is setting up the National Rainfed Area authority to find out ways to tackle the problem.