theindialog

February 26, 2010

Japan in India

Filed under: Economics,Industry,Politics — loggers @ 10:21 am

Amongst the several national themes that kept our minds busy, “Japan in India” is one that appeared consistently throughout legs 1 and 2, and would at times surface when we least expected it. Aside from the routine Honda car showroom, Sony outlets, and Yamaha motorcycles parked outside nearly every dhaba/tea vendor we visited, the presence of Japanese companies and culture in India is palpable.

During our visit to Ludhiana (India’s manufacturing hub) in Leg 1, we were fortunate to have visited the factory of Rajnish International, which specializes in the manufacturing and export of diesel fuel injection spares and other components for the auto industry. While Rajnish takes pride in having developed the vast majority of its production technology in-house, we were shown one Fanuc machine that performs an aspect of the steel cutting process that is too intricate for the domestic technology.

in-house technology at Rajnish Int'l

Fast forward to our trip to Kolkata, where we visited the manufacturing facility of formal menswear brand, Success, and learned that all of their polyester is imported from Teijin Fibers. The Japanese textile manufacturer’s product is described as superior to its cheaper Chinese counterparts in fabric quality and dye (particularly black), and this gives Teijin its edge. In Aizawl, we spotted DVD’s of Japanese soap operas being sold on the street (although Korean dramas were more popular) and L&T-Komatsu construction equipment at work on the road from the airport to the hotel. In Bodhgaya, we visited Japanese shrines and encountered several hotels and restaurants with signs catered to the hoards of Japanese tourists. Even at home in Mumbai, TATA Hitachi machinery can often be seen at construction sites and the annoyingly catchy tune of TATA DoCoMo ads has us reaching for our remotes during commercial breaks.

Japanese sign in Bodhgaya

Komatsu building Mizoram

Aside from private ventures, projects are being undertaken on a government-level to strengthen economic ties: the USD 90 billion Delhi-Mumbai Industrial Corridor being in the spotlight. In September 2009, the Indian Union Cabinet approved an INR 17,700 crore (USD 3.7 billion) conditional loan from Japan to help build the western arm of the corridor. The condition is simple: give the biggest contracts to Japanese companies. As mint points out, the conditions officially state that 1/3 of the total contracts must go to Japanese firms. However, if India uses Japanese equipment to build a part of the corridor, chances are high that it will have to use Japanese equipment to build the whole thing.

Map of the DMIC, source: delhimumbaiindustrialcorridor.com

In Delhi, we were lucky to meet with Amitabh Kant, Principal Secretary & Special Commissioner, Industries (Government of Kerala) and CEO of the DMIC.  He articulated that the project will be managed by an entity resembling a private company, which will effectively streamline the entire investment process for Japanese companies looking to be a part of the project. This is comforting when picturing a scenario where Japanese delegates and their interpreters have to struggle with local agencies for land acquisition rights or a consistent supply of power and water.

The DMIC will certainly serve as a cornerstone of the economic relationship between the two countries, as mint anticipates it will attract new investments of ~USD 50 billion and create jobs along the corridor for several years. While it took slightly longer to hit news pages in Japan, the project finally received coverage in the Nikkei this month and is gradually gathering excitement in the Far East.

Yukio Hatoyama with Manmohan Singh in Dec. 2009, source: thehindu.com

As Japan copes with soon becoming the world’s number 3 economy, the need to maintain a close economic relationship with India will only get stronger. Demographically, India is the dream partner for a graying Japan who has slowly but surely been running out of gas. On the flip side, Japan has the organizational and technical expertise to create the infrastructural foundation that India needs to reach the next stage of its development. The hope is that more private ventures and projects like the DMIC are implemented and that politics do not get in the way of what can evolve into one of the world’s most powerful and lucrative economic partnerships.

November 17, 2009

Power(less)

Filed under: Industry,Maharashtra — loggers @ 9:49 am

In addition to visiting an underground coal mine outside Chandrapur, we also had the opportunity to visit the more modern and less labor intensive open cast mines. Named so because they are carved out from the earth and left open to the skies, these mines can be blasted to a limit of a few tons, compared with only a 7kg blast that we experienced in the underground mine. These blasts take place once every 2-3 days as the coal mined per blast is much higher and it takes time to be removed by the trucks[1]. Licenses to operate these mines are only given to those companies who utilize the coal to generate power for the state grid.

Open Cast Mine

The Chandrapur Super Thermal Power Station (CSTPS) is one such plant that receives some of its coal supply directly from these mines, part of its daily requirement of 60,000 tons. Considered to be one of the largest power plants in Asia with an installed capacity of 2,340MW, it has also planned an expansion for additional 1,000MW of generation capability. With its (and the coal mines) location not very far from the city centre, it is not surprising that pollution levels are so dangerously high.

Chandrapur Super Thermal Power Station

Come January though, this plant could become a victim of the water shortages that have been affecting a large part of the Vidarbha region. With not enough rainfall this year, everything from farming to drinking water to power generation has been indirectly affected. However, completely shutting down this plant would amount to a power shortage catastrophe across a state that already has a deficit of 4,000MW[2]. Although private power generators such as KSK Energy and the Adani group have announced plans to install more capacity, these are not expected to be online within the next couple of years. The government is expected to tap its reserves by opening up one of its dams in order to prevent a complete shutdown, but at no point has our power deficiency been more glaring than here.


[1] These trucks can be used only on the roads around the mine, and not on public roads

 

[2] Power requirements of Maharashtra amount to 15,000MW, compared to installed capacity of 11,000MW

November 13, 2009

Fuel For Our Country

Filed under: Economics,Industry,Maharashtra — loggers @ 3:58 pm

The Vidarbha region in eastern Maharashtra, along with parts of Chhattisgarh, Orissa and Jharkhand, is extremely rich in natural resources, particularly coal and iron ore. Chandrapur, known as the “Black Diamond” city, has developed around these mines and is considered to be the most polluted city the world[1] – we could attest to that unenviable tag. We noticed the roads leading up to and from the city to be terrible, mainly a result of the umpteen trucks filled with coal, iron ore and timber (the Ballarpur paper mill is nearby) that ply these roads. Had rail connectivity been able to handle the volumes generated by these industries, maybe the situation wouldn’t have been so bad.

The underground coal mine we visited has been run by Coal India since 1968, which has confirmed reserves for the next 100 years. Most of the coal mined from here is used in the local industries and power plants. The site itself doesn’t seem to have changed in the last 40 years, and the elevator that took us down 170m wasn’t for the faint-hearted. Trolleys carrying the mined coal have dedicated tracks on both sides, with a narrow walking path through the middle. Communication with other workers on the site and managers above is done through an antiquated system (probably with some divine assistance, as shown below).

in spite of gods

In spite of the gods

The manager who took us around the mine declared that the quality of the coal was comparable to that mined in some of the best Australian sites, with high calorific content. However, the mine has been running losses for a few years now, mainly due to high operating costs. This can be attributed to lower productivity rates, both in labor and capital (limited technology use), essential components of the Solow growth model. We witnessed the laggard labor productivity first hand during the hour we spent in the mine, and the manager rightly lamented that the day’s tonnage target will probably not be met, yet again.

Coal mining is a very hazardous job and as a result daily wages can reach upto Rs.1000/day (compared to Rs.120/day for other labor). Health concerns such as asthma, bronchitis and life expectancy notwithstanding, this is a “get rich quickly” occupation, which was also apparent when we spoke with a young miner who said his life would be made after a few years. Incidentally, during our train ride to Patna this had come up in conversation with Chotey, and he mentioned that some of his friends work in these mines but he didn’t want to due to the health issues involved. India’s dependence on coal as a source of power[2] and the demands we will face is no secret. For the sake of uninterrupted industrialization, there is no knee-jerk solution to substituting this fossil fuel. However, this doesn’t absolve us of our responsibility to develop clean, renewable fuels so that coal could one day join the club of “has beens”.


[1] Its ppm level is 924 micrograms, compared to a normal/healthy level of 100 worldwide

[2] Coal based power plants contribute ~63% of India’s power requirements

October 13, 2009

Jamshedpur

Filed under: Economics,Industry,Jharkhand — loggers @ 12:09 am

Jamshedpur, named after the scion of the Tata family Jamsetji Nusserwanji Tata, is the township created around their flagship TATA Steel factory in Jharkhand. Established in the early part of the 20th century after clearing out dense forest, this location provided easy access to the abundant iron ore deposits present in the nearby districts. The city is well endowed with a large public park, sprawling accommodations for its employees, a zoo and even an amusement park. Conversations with employees/affiliates reinforced our belief that the TATA management has taken great care in providing for its employees. Today, ~80% of the city’s population is connected to the steel works plant.

Our first stop in the city was the Russi Mody Center for Excellence. This serves as a center where professional institutions[i] from various business fields have their regional offices. The center has exhibition halls dedicated to J.N. and J.R.D Tata’s achievements, the former providing the foreground for India’s industrialization process. In addition, it also houses corporate India’s first business archives, right from the company registration documents in 1904. Designed by the well known architect Hafeez Contractor, this complex is supposed to be an elegant blend of international edifices such as the Colosseum and Hanging Gardens of Babylon, with a rare and enviable collection of paintings by M.F. Husain.

Registration document for TATA Steel

Registration document for TATA Steel

M.F. Husain's painting

M.F. Husain's painting

Next, we were given a brief tour of the steel plant, which covers an area of 24 square km and provides the city its skyline. Currently producing 6.5m tons of steel per annum, the plant employs a total of ~45,000[ii] employees. The environment lends itself as a city buzzing in activity with bikers, cyclists and cars moving from one part of the plant to the other. It also has its own locomotive tracks to transport slag and other materials. We observed three different parts of the process: a) Washing the iron ore and smelting it into slag b) hot pressing the slag and turning it into a coil and c) galvanizing and cold rolling, where elements such as zinc are added to prevent rusting. Among the many uses that steel produced in this factory has seen range from the Howrah bridge in Calcutta to that used in the construction of facilities for the Beijing Olympics. The plant was no doubt an exceptional industrial achievement and with the history that comes with it, makes for something we should be proud of.

Tribes form an important part of the Jharkhand economy, and it is predominantly in their surroundings that the abundant natural resources of the state are found. Even today, industrialists grapple with the government over land acquisition and rights of tribal populations. The TATA group has been doing its part in helping the tribal economy to develop and integrate with mainstream society. The Tribal Cultural Center was set up with this purpose in mind, and to help spread awareness of their way of life. Very professionally designed and informative, this is definitely a stop on the itinerary of visitors of the plant.

Tribal Cultural Centre

Tribal Cultural Centre

Recreation of tribal hut

Re-creation of tribal hut

Another aspect of TATA’s social action plan includes the Community Development Center, addressing social issues in urban areas. We met with Mr. Ranjit Bhattacharya, head of the center and a national level powerlifter (and self-proclaimed actor, director and songwriter). Among the activities conducted include vocational courses, skills development (e.g. computers) and socially relevant training. Himself a sportsman, he also places a large emphasis on sports such as volleyball, football, cricket, weightlifting and basketball. Apparently MS Dhoni[iii] has also used Jamshedpur’s extensive sports facilities for his training, which are considered second only to Calcutta in the East. Our conversation slowly drifted to the killing of other sports by cricket, to a torrent on Alok for not speaking Hindi to jokes on marriage (sprinkled with mimics of Japanese shop owners and Shammi Kapoor impersonations, and other highlights not suitable for this blog). One of the most colourful personalities on our travels so far, it is in search of people like him that we are exploring the country.


[i] E.g. Institute of Chartered Accountants, Indian Institute of Industrial Technology

 

[ii] This is down from 70,000 a few years back, mainly due to automated technologies

[iii] This anecdote had a clear tone of distaste to it, as Mr. Bhattacharya said “he (Dhoni) has forgotten his roots. You boys, on the other hand, should never forget your roots”

Blog at WordPress.com.