For the week ended
October 6, 2004, the US Mutual Fund managers invested more money
in the Emerging Market Funds than they ever did in the past 26 weeks.
Taiwan, for instance, netted $1.35 billion (Rs 6,210 crore) in that
week and was clearly the leader among the other emerging markets.
Its portfolio investments showed a 3.2 per cent jump over last year.
Other developing nations too, were not far behind. Philippines,
Indonesia and South Africa too witnessed substantial jumps of 5.2
per cent, 5.7 per cent and 5.2 per cent respectively. India witnessed
a 1.9 per cent increase over last year in its share of the US funds
attracting an investment of $276.9 million (Rs 1273.7 crore) in
that week. All that good news has emerged from global investment
bank, J.P. Morgan's recent report Global Emerging Markets: Market
Strategy, indicating a return of interest of the US fund managers
in an area which they had forsaken after the sudden Asian currency
crisis of 1998.
But Adrian Mowat, Chief Regional Equity Strategist,
J.P. Morgan and author of the report, is still a little iffy about
the emerging markets. Not too much should be read in these investments,
he says, because there is still no clear trend. Moreover, the attractiveness
of the emerging markets will depend to a large extent on the global
economic outlook. "If the US and Japanese economies continue
to grow, then investments may start going back to these regions,"
he adds. Until then, though, emerging markets will make hay.
Sebi 0, Arora 1
200 days after the Securities and Exchange Board of India (SEBI)
barred Samir Arora, former Singapore-based Chief Investment Office
of Alliance Mutual Fund, from Dalal Street, the Securities Appellate
Tribunal (sat) last fortnight gave Arora the clean chit. It was
in August last year that Arora, once considered the poster boy of
the mutual fund industry, was accused by SEBI of insider trading
in Digital GlobalSoft and failing to notify SEBI when Alliance's
holdings in five companies crossed the 5 per cent limit. That apart,
he was accused of scuttling a planned sale of Alliance Capital.
How does Arora, who had all along been maintaining his innocence,
feel now? "I was waiting for this day," a triumphant Arora
told BT. His future plans involve doing "something related
to the Indian capital markets". Meanwhile, Arora should watch
out for a High Court appeal that SEBI is free to go in for following
the sat order.
Crucial amendments to India's Patents Act are
paralysed by conflicting interests.
|In jeopardy: India is likely
to miss the pharma patent deadline
two-and a-half months from now-December 31, 2004 to be precise-the
country will make a momentous switchover in the pharmaceuticals
industry from process patents to product patents. Yet, crucial amendments
to the Indian Patents Act via the Patents (Amendment) Bill 2003
stand stymied because Indian and foreign pharma companies are unable
to agree on the nature of the amendments, besides which various
government ministries have pitched in with their own demands.
The bone of contention seem to be Section 3
(deals with non-patentability of products) and Section 25 (deals
with pre-grant opposition) of the December 3 Patent (Amendment)
Bill, 2003. Ranbaxy, the country's largest pharmaceutical company,
wants only those products that are novel, innovative and can be
put to commercial use, to be made patentable, and not those where
only marginal improvements have been made in previously known compounds.
Says a company spokesperson: "Such granting of patents will
reward innovators, but not beyond a point and also prevent 'evergreening'
But that's something the multinational drug
companies vociferously oppose because they say that original research
is expensive, risky and lengthy and, therefore, the innovator should
get to reap the most from innovations. The other controversial issue
is Section 25 of the Act, which under the third amendment has done
away with pre-grant opposition (opposition at the stage of advertisement)
and only allows for post-grant opposition. "It will result
in the grant of frivolous patents and avoidable litigation in the
country," says D.G. Shah, Secretary General, Indian Pharamaceutical
Alliance, an association of domestic pharma companies.
Demands from various government ministries
have only added to the confusion. For example, the Ministry of Chemicals
and Fertilisers has raised objection to granting of patent to pharma
applications filed in the Mail Box facility (it refers to the 10-year
grace period offered to developing countries, where the product
patent regime under the WTO comes into effect in 2005 and not 1995).
"Nearly 4,000 applications have been filed using the Mail Box
facility. But several of these molecules were invented pre-1995.
The Ministry is of the view that since these molecules have been
launched earlier, patents should not be granted to them," says
a Ministry official.
Even as newer contentious issues come to the
fore, the clock is ticking away for India. And it's quite likely
that the cost of missing the patent deadline will be more than just
a global embarrassment.
Protection Is The Key"
M. Burns, head, Pharmaceuticals
Division of Switzerland-based Roche, is keen on stepping up business
with India, but wants a world class IPR regime ahead of that.
BT's spoke to him recently.
On India's IPR regime: Only when we
can be sure that our intellectual assets are fully protected will
we initiate collaborations with Indian institutions and companies.
On outsourcing R&D to India: It's
a major issue for discussion at our headquarters, but R&D must
be strongly backed by patent protection and data exclusivity.
On product patent and drug prices: Entry
of a product patent regime per se does not imply an increase in
prices, it depends on the market situation.
On investments in India: Roche plans
to invest around 75 million Swiss francs (Rs 271.35 crore) in the
coming five years for clinical development in India.
ON THE ROAD DEPARTMENT
FM P. Chidambaram shows how it is done in a
day-long hardsell of India to Europe Inc.
October 8, 2004. Dorchester Hotel (Central London).
|FM P. Chidambaram:
India is the place to be
finance minister Palaniappan Chidambaram walks out of the lift and
towards Park Suite, thus named because it overlooks a swathe of
green, Hyde Park. He is dressed in a deep-blue three-piece suit
and is sporting a light-blue tie, not his trademark white veshti
and white long-sleeved shirt. Park Suite is the venue for Passage
to India, a series of interactive sessions between the minister
and India-bound investors organised by Morgan Stanley and its Indian
JV J.M. Morgan Stanley.
Over the next nine hours, Chidambaram, one
of India's top-most lawyers before he became Finance Minister and
an MBA from the hallowed Harvard Business School is at his most
persuasive, selling India to Europe Inc. Beginning with a breakfast
meeting with David Walker, Chairman, Morgan Stanley International,
and Nimesh Kampani, Chairman, J.M. Morgan Stanley, the minister
has five closed-door meetings with groups of 25-30 CEOs and senior
executives from European companies (think Rio Tinto, Gas de France,
P&O), Non-Resident Indians, bankers (Standard Chartered CEO
Mervyn Davis is there), fund managers, private equity investors,
and assorted busy bodies. Chidambaram's refrain is the same in every
meeting: India is a great place to invest in; the fm's team, comprising
D.C. Gupta, Secretary, Ministry of Finance, G.N. Bajpai, Chairman,
SEBI, Ashok Lahiri, Chief Economic Advisor, and R. Banerjee, Joint
Secretary, Ministry of Finance provides the appropriate backing
Not surprisingly, the concerns raised by potential
investors were similar. Would the emergence of the communist parties,
as a key ally, impede the process of economic reforms, asks one.
What is the government planning to do as far as disinvestment of
public sector companies is concerned, asks another. And where is
the government's position on a foreign bank acquiring an Indian
one, questions still another. The minister responds to each in turn.
He assures investors that the coalition at the Centre would still
focus on economic reforms. "The government will attend to the
requirements of political economy without comprising on our commitment
to economic reforms," he says. "The space for private
sector can only grow in India, as the country offers huge opportunities
for investment in infrastructure industries including power, telecom,
seaports, roads, airports and the petroleum and mining sectors."
That prompts the usual query regarding India's targeted foreign
investment and the usual answer about the sky being the limit. "A
roadshow of this type is useful in clarifying the government's stance
and gives investors and companies an opportunity to interact with
the minister and make their own assessment of the new government's
policies," says Lord Raj Bagri, Chairman, Metdist.
In the afternoon, over tea, the minister meets
with portfolio managers of financial institutional investors (FIIs)
such as T. Rowe Price, Boyer Allen Asset Management, Threadneedle,
Cheyne Capital Management, Sloane Robinson and Gartmore Investment
Management. The latter choose to play the Devil's advocate? Isn't
the fiscal deficit cause for concern? Will there not be a major
surge in inflation? Won't interest rates head north soon?
The last session begins at half-past-four and
sees Chidambaram meeting with Europe's opinion leaders. Lord Meghnad
Desai, Professor, Centre for the Study of Global Governance at the
London School of Economics is there; as are Martin Wolf, Associate
Editor, Financial Times, Christopher Smallwood, Economic Adviser
to Barclays and Nicolas Maclean, Senior Fellow at the International
Institute for Strategic Studies, among others. "There was both
style and content," says Desai. "If this government lasts-I
have my doubts (about that), though-then it will do a lot of good
for the country." Nine hours after he entered the suite, Chidambaram
walks out, briefcase in hand, and smile on his face. Unlike E.M.
Foster's A Passage to India (it ends with a question mark on whether
the English and Indian races can be friends) this Passage to India
seems to have ended on a happy note.