Water!: Everywhere, nor any drop to drink

India desperately wants to house a chip foundry. Never mind that Taiwan is the global capital of fabless chip making and that it doesn't make sense for semi conductor companies to invest in rebuilding those capacities elsewhere. And never mind that Intel, the world's best-known branded chip maker has found it worth its while to put down plants in countries such as Malaysia and China, but not India. The company's designated heir to CEO Craig Barrett, Paul Otellini was in India just the other week and, predictably enough, was posed the question by a bright-eyed reporter. "We are open to a manufacturing base in India, although there are no immediate plans," came the response.

This writer can think of one reason the company will not, and should not, come to India: water. Chip-making requires lots of water. According to one estimate, the manufacture of a typical two-gram silicon chip requires about 32 kilograms of ultra-pure water. And India, just in case you hadn't noticed, stands on the brink of a water crisis. That isn't scare-mongering: between 1951 and 2001 India's per capita availability of fresh water fell from 5177 cubic metres (cu. m) to 1869 cu. m. The United Nations says anything below 1700 cu. m constitutes a 'water-stress' situation where a country doesn't have enough water to satisfy the food, household, and industrial needs of its populace.

More recent figures of per capita availability aren't, well, available, but chances are, it is parlously close to that 1700 cu. m mark. Attribute this turn of things to India's water management (or lack of it) and the 13.3 million people the country added to its population, on an average, every year between 1951 and 2001.

Reckless industrialisation, with little regard to the treatment of effluents (70 per cent of water in Indian rivers is polluted), an increased reliance on ground water, and accelerated urbanisation has exacerbated things. As things stand, India's annual requirement of water is projected to increase from 634 billion cu. m to 813 billion cu. m by 2025, and no one, certainly not the government, has any idea of how to meet that demand. ''Water needs to move to the centre-stage of policy-making in our country," says Sunil Ghorawat, CEO, Fontus Water, a Delhi-based water solutions company. "This is a time bomb waiting to explode."

The Indian agriculture sector is the largest user of water, accounting for 90 per cent of total annual withdrawals (industry accounts for 6 per cent, and households, the rest). However, 60 per cent of water drawn for irrigation is lost through seepage. Then, there's the fact that 21 per cent of the country receives rainfall less than 750 mm a year while 15 per cent, does more than 1500 mm a year. Interlinking rivers could be one way to achieve a more equitable distribution of water. Following a directive from the Supreme Court, the government has embarked on this rather fanciful project (target: Year 2015) which could surprise everyone by actually doing what it is expected to: prevent the discharge of excess rainwater into the sea and transfer water from water-abundant areas to water-deficit ones.

Even this may not be enough if the government refuses to recognise that water is an economic asset and treats it as such. According to the Central Public Health and Environmental Engineering Organisation (CPHEEO), an investment of Rs 53,720 crore is required for water supply, sanitation, and solid waste management during the Tenth Plan period (2002-2007). That calls for viable business models that hold the promise of adequate return on capital, and participation by the private sector. Appropriate user charges will ensure that distribution and supply networks for water can be sustained economically (and help conserve some of the resource in the process; in Delhi alone, distribution losses account for 40 per cent of the total supply). "Water distribution should be privatised just as electricity distribution was (in some parts of the country)," says Somak Ghosh, Director and Head (Project Advisory and Infrastructure), Rabo India. "The supply can remain with the public utility.''

Still, with the polity unwilling to be seen as farmer-unfriendly by levying user charges on water, the odds of that happening anytime soon are just about the same as those of Intel deciding to put up a plant in India.

-Sahad P.V.

METRICS
The BT 50

As this magazine goes to press (the evening of June 17) American stocks have risen to around the highest they have ever reached in the past year (a 11-month high to be exact), and the FTSE 100, the Dax, and the Cac 40 are all up. Although the link between the American indices, especially the NASDAQ composite index and India's own has become somewhat nebulous following the great tech crash, the BT 50 is up too. Some of the exuberance is rational. After all, some scrips are terribly undervalued, and corporate results, especially of the big companies, have been largely good. And some of the exuberance, isn't. The bulls, it would appear, are stirring.

Biotech Bulls
India's first early-stage biotech fund opens.

Waiting to exhale: Finally, one investor will do so too

Tall, clean-shaven, and balding in the most distinguished way possible, 45-year-old Sarath Naru presents a striking picture. Right now, the peripatetic Managing Director of Andhra Pradesh Industrial Development Corporation Venture Capital Limited (APIDC Venture Capital, for short) is in the middle of a scathing criticism of the profession to which he belongs. "Venture capitalists in India have moved their risk-profile to a more moderate level as a knee-jerk reaction to the excesses of the dot-com era," he says. Naru is doing more than speak, he is putting his money where his mouth is. APIDC Venture Capital, a joint venture between Chennai-based Ventureast and APIDC, has just launched The Biotechnology Venture Fund a Rs 150-crore 10-year close-ended fund that will invest in early-stage biotech companies. "There is a misplaced feeling that 'angel funding' is required to fund these," says Naru. "That's semantics; this is the kind of funding VCs still do in the US and elsewhere."

In capital-intensive biotech, the fund hopes to invest in companies operating in areas as diverse as healthcare, drug discovery, and agricultural, dairy, environmental, and industrial applications-investments that its half-a-dozen fund managers will identify, nurture, and steer to their logical ends. Indian biotech's first lady, Biocon's Kiran Mazumdar-Shaw believes funds such as APIDC Venture's are just what the industry needs. Indian biotech companies, she adds "can leverage their low-cost innovation base to create a workable services business," that serves as an "earn-while-you-learn model". The Biotech Fund's first three investments are in companies that operate in the services space, as Contract Research Organisations. "Each has a unique workable business model with a product opportunity at a later stage," says Naru. The show is on the road.

-E. Kumar Sharma

India's Southwest?
Bangalore's Deccan Aviation wants to be it.

Deccan Aviation's Gopinath: Any resemblance to Herb is purely coincident

Heads of state, assorted politicos, and rich businessmen wing in for a darshan of Godman Satya Sai Baba at Puttaparthi, a town in Andhra Pradesh. The ordinary devout travel by road or train. If Bangalore-based Deccan Aviation has its way, they too could soon be flying in for a session with the miracle-worker. On August 15, the company's airline, Air Deccan, billed as a "No Frills, Low Cost" venture will get off the ground and fly to some 20 destinations in southern India that other airlines don't fly to, or do so infrequently. And so, the airline will do the distance from Bangalore to Hubli, Hubli to Mumbai, Chennai to Rajamundhry, Hyderabad to Vijaywada, and other such. "This is a no frill airline," says Captain G.R. Gopinath, the Managing Director of Deccan Aviation, explaining that business lounges, mileage programmes, reserved seating, and food on board will be alien to the Air Deccan experience. "Our sole aim is to get a passenger from Point A to Point B." Deccan Aviation already runs one of India's largest chopper services and proposes to leverage infrastructure and knowledge from the venture to make Air Deccan fly. Southern India is its initial business-geography, and high-end train travellers, the primary target-as a benchmark its rates will be around 35 per cent lower than those of India's domestic carriers. The company has acquired six turbo-props, each with a capacity of 48 passengers, and expects its initial investment to be in the region of Rs 50 crore. Gopinath, who claims Air Deccan will start operations on August 15 with 50 scheduled routes (eventual target: 70), is betting on business activity in the smaller cities to sustain the airline. "Everybody scoffed when Southwest began operations with a single aircraft in 1973," says Gopinath. "Today it is a $6 billion (Rs 28,200 crore) company." We get the drift.

-Venkatesha Babu