Three years ago, when Supertech Group, an NCR-based realtor, was nearing its 25th anniversary, its chairman and managing director R.K. Arora asked his team: “What next?” Six months later, after an exhaustive internal survey of the luxury segment, they concluded that consumers wanted a “complete” branded lifestyle. A little over a year later, Supertech tied up with Armani, the iconic Italian luxury label, to offer branded luxury homes. Sporting a by-invitation-only tag, the 100 branded luxury homes (ranging from 3,000 sq. ft to 5,000 sq. ft) “for buyers with not just money but also class and taste” will be fully furnished apartments with interiors, fittings, furnishings and styling done completely by Armani. “The luxury buyer doesn’t want to just wear international brands, now he even wants to live in them,” says Arora. Last year, the Lodha Group, too, tied up with Armani for its ambitious World Tower — which it claims will be the tallest residential tower in the world. Soon, “after customer response”, it forged partnerships with other brands, including designer Philippe Starck, Pei Cobb Freed & Partners, Jade Jagger, Ken Smith and Six Senses Resorts & Spa.Experts predict that the next two years will see several branded luxury homes coming up in metros and major Indian cities. Hand-stitched leather sofas in bold colours with the iconic Lamborghini logo, Christopher Guy’s neoclassic work in mahogany and vineer, Phillipe Starck’s custom-designed metal sculptures doubling as chairs and handpicked pieces of furniture, wall-art and flooring inspired by textile art, Aston Martin’s young, sleek designs across a range of products, IPE Cavalli’s home solutions through its iconic furniture label Visionaire, Swarovski-encrusted residences, and many other brands behind such products are collaborating with brick and mortar developers to “curate” and outfit apartments, villas and penthouses in India. ‘Anyone with good taste and style will indulge in bespoke luxury. So the trick is for developers to ensure customisation’ Viraj Mahajan, Founder, The Furniture Library (Photograph by Sanjay Sakaria)According to consulting firm KPMG, between 2008 and 2012, around 182 luxury projects comprising 25,570 units across the cities of Delhi-NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata were launched with a value of about $30 billion. In 2012 alone, around 5,000 such units were launched, and almost all were absorbed. The luxury housing market — 5-6 per cent of the overall sector — is growing at 25-30 per cent per annum. According to the World Wealth Report 2013, India clocked the second highest growth of 22.2 per cent in its high networth population, after Hong Kong. Currently, India boasts of 185,000 high networth individuals. For branded luxury homes, this is the target audience. One For All, All For One Even within the luxury segment, ‘branded’ homes are still an emerging and niche area. Anuj Puri, managing director of Jones Lang LaSalle, reckons that while developers are priming the mindset of target consumers by creating such a demand, the promise of having professionally designed interiors and exteriors, highly evolved and centralised facilities management, and various extras such as concierge services, valet parking and ultra-modern security measures lends these offerings high appeal. ‘The signature style of these brands is what makes them iconic. To deviate from the design philosophy altogether is blasphemous’ Seetu Kohli, Director, Ace Maison(Photograph by Ritesh Sharma)Strong economic growth in the past decade (the downturn notwithstanding), exposure of well-travelled Indians to global living standards, and the increasing upwardly mobile segment are some of the factors that have led to the increase in demand for luxury homes in India, says R. Karthik, chief marketing officer, Lodha Group. He adds that the global Indian now seeks the same brands and experiences in his home as in his clothes or the car he drives.The flip side to ‘branded’ homes is that everything is, well, branded. So, from the mother-of-pearl wall finish to the Swarovski-encrusted light fixtures, one luxury home is near identical to another, with little or no room for bespoke indulgence, typically regarded as the mainstay of most luxury brands. “Most branded homes lack flavour and individual taste. So the trick is for developers to ensure customisation — something that most luxury brands can’t offer beyond a point given the global design specifications,” reasons well-known interior designer Viraj Mahajan of The Furniture Library, which specialises in bespoke furniture. “As a designer, it’s important to understand your buyer; whether he likes his feet up while reading, what does he read… that’s how opulent, tastefully done homes are created.” In his view, branded homes are often an extension of seven-star hotel suites. Shehzad Khan, proprietor of The Gold Leafing Studio, while agreeing that bespoke services are limited in most branded luxury homes, feels many international luxury brands are waking up to blending Indian textures and designs with their international styles. Khan, for instance, is doing the champagne-coloured silver and gold leafing work for Armani Casa at Lodha Group’s World Towers. break-page-breakMarket analysts feel that both developers and luxury brands have to figure out how to meet customisation requirements. Neeraj Bansal, partner at KPMG, says that developers will have to keep a judicious mix of ‘fully furnished’ and ‘customised’ options. With so many projects that will eventually be rolled out, the litmus test will be in understanding consumers’ tastes and demands. Why would the luxe consumer, for instance, want to enter through a fairytale gate to reach his home simply because a developer has tied up with Disney? Or, what if the luxury consumer wants the iconic Regis Mathieu rose quartz chandelier while Swarovski, by virtue of its tie-up with the developer, offers its own shimmering piece? Or, what if the consumer wants vintage restored art and carefully collected furniture instead of the modern furniture that Lamborghini offers? Seetu Kohli, director at Ace Maison, which has tied up with real estate developers to bring a complete range of Christopher Guy, Lamborghini, Fendi Casa, and Aston Martin furniture and design solutions, says that while luxury brands offer tremendous choice, the luxury consumers need to understand that the labels cannot deviate from their original style statement. “The signature style of these brands is what makes them iconic. To deviate from the design philosophy altogether is blasphemous,” she says. Supertech’s Arora says that for the Armani Casa project, customisation will be extremely limited as the design label clearly spells out the details for various rooms and other areas. “You need to know what the brand stands for. The sensibilities of the brand and the consumer have to co-exist. There’s a reason why you pick up a Louis Vuitton bag. You understand its sensibility. You don’t complain saying it would look better with a gold-plated buckle on the side,” he says. ‘The luxury buyer doesn’t want to just wear international brands, now he even wants to live in them’ R.K. AroraChairman and managing director, Supertech Group (Photograph by Ritesh Sharma)But Om Choudhry, CEO of Fire Capital, a realty firm that creates luxury villas and penthouses in Whitefield, Bangalore, reasons that too many specifications might put off buyers. So, Fire Capital’s luxury brand Empyrean focuses on offering quality maintenance services and providing landscaped open spaces besides recreational facilities with high-end fitness equipment. Urged by consumer demand, however, by the year-end, it will announce tie-ups with two premium European brands for kitchen, bathroom and wardrobe fittings. For its forthcoming project in Kufri, Himachal Pradesh, it is tying up with a Swiss company to design, manage and maintain a row of exclusive, mega luxury villas.Beyond Interiors What is beyond debate is that the consumer is definitely sure of what he wants. No wonder then that branded luxury abodes are extending the promise of opulence to an even greater degree — concierge services, trips to Milan, tie-ups with hospitality chains to maintain interiors, lifetime warranty for wall finishes, and even complimentary tailored Armani suits hanging in the wardrobes. Sunteck Group, for instance, has a tie-up with the high-end luxury Vertu phones for its exclusive concierge service. “From booking movie tickets to sending customers to exclusive parties in Hollywood, you cannot imagine the value-added services that we provide,” says Kamal Khaitan, chairman and managing director of the company. The Lodha Group sent some of its buyers to Milan to meet the Armani Casa design team. Besides, it has tie-ups with renowned concierge company Quintessentially and Six Senses Resort and Spas for value-added services. The strategic partnerships between developers and international luxury brands gives credibility to the developer and helps the luxury brand establish a foothold in the market. Typically, the model works on either revenue-sharing or one-time fee model, wherein the developer, to share the brand’s tag, offers the brand a design fee or share in revenues. The real estate developer is assured of visibility. “Additionally, branding helps the property command a premium over non-branded properties,” says Bansal of KPMG. Though Supertech is still finalising the rates for its project with Armani, it is touted to be 75-100 per cent higher than other products in a similar non-branded, luxury category. What’s more, many feel that branded residences even create 20-30 per cent resale value.What the buyer gets is a pad designed by iconic brands. As a buyer who walked into the show villa of World Towers, exclaimed: “Armani is God and he’s made me a believer.” Clearly, branded luxury has its followers’ faith. BRAND VALUE: IPE Cavalli’s Visionaire label will feature many luxury homes in India (Photograph Courtesy: Visionnaire)(This story was published in BW | Businessworld Issue Dated 07-10-2013)
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Most people discover the joys of life amidst their families, their hearth and homes. And they spend half their lives in the warmth of their homes. Considering this, to splurge on creating a nice, exclusive little world for themselves is not such a bad idea. Those who have the money can do it with aplomb; luxury homes can be built or bought off the shelf. Those who don’t have the money slave and save, and hope to get there; others have to settle for leafing through smart, gleaming brochures. And dream.So how does one define a luxury home? Is it determined by the cost? Yes, cost is one crucial factor. Builders define a luxury home in Mumbai or Delhi as one that costs Rs 5 crore or more; Rs 3 crore or more in the other metros. “More money buys you a larger space, which is necessary for luxury living,” says Anshuman Magazine, CEO of property consultancy CBRE South Asia. “But that is not all. A luxury home is defined by many things — locality, the quality of design and fittings, the level of maintenance and the character of the community around.” Providing air-conditioned apartments in gated communities with a gym and pool, Magazine says, is passé. Things have moved on and the luxury hunter wants his apartment to be automated: where lights come on when he enters his bedroom; and in which he can control his television and curtains by tapping on his iPad. “We have moved ahead from providing just nice marble flooring,” says Abhisheck Lodha, managing director of the Lodha Group. Over 50 per cent of the group’s Rs 8,700-crore revenues come from luxury sales. “We have evolved to the next level where details of design and interiors are crafted to indulge the senses,” he adds. The Lodhas were among the first developers to begin selling branded homes with elegant interiors — an Armani tag for their World Towers in Mumbai, Philippe Starck for their New Cuffe Parade project and Jade Jagger for Fiorenza. What is in it for the builders? Anuj Puri, CEO of property consultants Jones Lang LaSalle (JLL), estimates the “market for super luxury does not represent over 5 per cent of the overall residential market”. However, a class of builders is focusing on the luxury segment because of the higher returns. “Quality sells. Luxury homes give us between 30 to 50 per cent premium over the market,” asserts Lodha. NO LIMITS: Akshaya Homes' Abov in Chennai is a 38-storey tower with just 31 apartments of an indulgent 6,700 sq. ft eachBut in a slump, doesn’t the larger ticket size make marketing more difficult? Notes Shveta Jain, executive director of residential services at broking house Cushman & Wakefield, in a recent report: “The share of high-end segments in new launches has increased... in spite of stagnant demand. It is largely due to aspects like high land prices and development cost that developers have chosen to go for higher ticket size projects even while demand is more for affordable and mid-end segments.”The Luxury Of SpaceLuxury homes are defined by a mix of many attributes, but at the centre is providing the user the freedom from urban claustrophobia. One such project is Chennai’s Abov by Akshaya Homes, promoted by T. Chitti Babu. “Luxury living in Chennai was thought of as a build-it-yourself bungalow with a large garden. A house on a 1,500 sq. metre plot in Poes Garden would cost Rs 70 crore,” says Babu. “So, I decided to give the same luxury at one-tenth the price.”Babu’s project is a 38-storey tower in Chennai’s OMR area. It has just 31 apartments, each of them an indulgent 6,700 sq. ft, and one apartment to a floor. Each apartment has it’s own plunge pool, with a larger community pool on the ground floor. The club house, on the 34th floor, and the Ocean Bar, offer a panoramic view of Chennai. Each home is fully loaded. It includes touchpad-operated controls, 10 years of maintenance provided by the developer, exclusive suites for guests, a private movie hall, and even a grand piano in the lobby. Price tag: Rs 6.5–7.2 crore. break-page-break“Ten years ago, apartment culture was unknown to Chennai’s rich. Luxury apartments are a recent phenomenon,” says Babu. He has sold 11 of the 31 apartments and expects to complete the project by 2015. Babu is set to launch his next project with apartments priced in the Rs 15-20 crore range. The Kingfisher Towers in Bangalore, developed by the Prestige Group on Vittal Mallya Road, has a similar offering of space-in-the-sky with 8,500 sq. ft apartments, each with just four large, luxurious bedrooms. The community of 64 flatowners will spread themselves out over five floors of parking, a swimming pool on the 15th floor, clubhouse facilities on the 6th floor, and round-the-clock concierge services. The cherry on the project is the Mallya family occupying all 50,000 sq. ft of the top two floors. “The exclusivity of just 64 apartments among the who’s who has driven up prices to Rs 25 crore a flat,” says CBRE’s southern head Ram Chandnani. The Lodha Group, having bought the famous 17-acre Mumbai Textiles Mills from DLF for Rs 2,727 crore, has also decided to provide ‘bountiful space’ as the unique selling point for its new project, The Park. “We have learnt from London and New York where the best residences abut Hyde Park and Central Park,” says Lodha. Community spaces include a one-acre children’s park, large gymnasiums designed by Evander Holyfield, a cricket ground and even a spice garden. The pricing is equally stunning. The smallest two-bedroom flats start at Rs 3.5 crore, the 5,500 sq. ft ‘town houses’ will cost Rs 25 crore and the independent 1,000 sq. yard bungalows will touch Rs 100 crore and more. Branding Adds ValueWhat was started by Lodha and a few others has become a stampede in the luxury segment. Branding interiors or entire apartments with tags such as ‘Casa Armani’ has found good response. Those who did not have the patience to get their interiors done themselves felt western designers added elegance and modernity to homes. It gave them a ‘status address’ too. Branding around sports and golf-themed projects are an increasing trend too, says JLL’s Puri. “Golf is fast becoming a status symbol and lifestyle statement of the Indian super rich.” For builders, this means faster sales and a higher premium. STEP UP: Bhagtani Krishaang by Jaycee Homes in Mumbai offers apartments priced at Rs 5 crore for the upper middle class (Photograph by Umesh Goswami)In Gurgaon, for instance, London-based Homestead Infrastructure has launched the Michael Schumacher World Tower. Offering selling points such as a cantilevered helipad, a glass dome atop the building and a Michael Schumacher café, the 28-storey project is offering around 100 homes in different sizes at Rs 14,000 a sq. ft. More recently, IREO has announced an agreement with Hyatt Hotels for developing ‘Hyatt’ branded residences as well as a Hyatt hotel franchise for its township in Gurgaon. The 29-acre layout will include 265 ‘Hyatt’ homes managed by the hotel chain, a 460-room luxury hotel, office space and high street retail. The interiors will carry the ‘Tony Chi’ branding for residences. Interestingly, this niche luxury homes market is growing with developers targeting the aspirational upper middle class. One such Mumbai project is the 25-storey Bhagtani Krishaang that overlooks the Powai lake. With car parking and clubhouse amenities rising to level 6, residences start from level 7. A 30-ft lobby with a mural running through it adds grandeur to the tower. “The 2,400 sq. ft apartments are a cut above the rest. At Rs 5 crore apiece, we have made luxury homes affordable,” boasts Dipesh Bhagtani, executive director of Jaycee Homes. Agrees Lodha: “Luxury living need not be the exclusive preserve of the very rich. It should be available at all price points.” gurbir1@gmail.comgurbir.singh@abp.intwitter@gubir110(This story was published in BW | Businessworld Issue Dated 07-10-2013)
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The government may appoint an international expert to assess the reasons for the decline in gas output from Reliance Industries -operated D6 block in the east coast ahead of changes in gas pricing from April 1, Oil Secretary Vivek Rae said on 12 September' 2013. Revision in gas pricing is expected to benefit Reliance, whose existing contracts for gas sales from D6 block in Krishna Godavari basin will expire on April 1, 2014. Output from the block, which was expected to contribute up to a quarter of the gas supply in the country, has been falling since April 2010, cutting supply to power and other sectors. While Reliance blames geological complexities for the decline, upstream regulator the Directorate General of Hydrocarbons believes production has fallen because the company failed to drill the promised number of wells. "There is some technical dispute about the quantum of gas available in some discoveries in KG D6 block.. that matter needs to be resolved before we take a final decision on applicability of the new formula," Rae told reporters at an industry event. The finance ministry and a parliamentary panel have urged the government to ensure Reliance delivers any shortfall of gas it owes to customers at the old prices of $4.2 per million British thermal units (mmBtu). "That matter is under discussion and we will see how best to resolve it," Rae said, adding the committee overseeing operation of the block will decide on the reasons for decline in output. "If necessary we will even get in international experts to give their independent opinion and once it is resolved then all roads will be cleared either way," he said. Rae said his ministry had sought the opinion of the law ministry on levying additional penalties on Reliance for not producing the promised level of gas in 2012/13 financial year. He said the government had already issued a notice to the company for a $1 billion penalty for the shortfall. BP has a 30 per cent stake in the block while Niko Resources owns a 10 per cent share.(Reuters)
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Jones Lang LaSalle India, an international property consultancy released its report 'On The Verge Of Transformation: India Corporate Real Estate Trends 2013'that provides insights into the current state and future direction of corporate real estate (CRE) in India. Of the companies Jones Lang LaSalle surveyed globally, 44 per cent plan to expand in India over the next three years, but the country’s vast cultural diversity is one of the biggest challenges they will face when it comes to driving workplace transformation in the country. “In India, enhancing workplace productivity is a strategic priority, and this calls for more commitment from CRE teams. Workplace transformation projects offer CRE teams a unique opportunity to demonstrate value to the business. However, lack of investment capital, cultural diversity, employee resistance and lack of continued support often stop complex projects from being completed successfully,” says Yash Kapila, MD,Corporate Solutions, Jones Lang LaSalle India. As both Indian and Western companies seek to capitalise on India’s economic growth, there is increasing pressure to contain costs while enhancing workplace productivity. The report shows that 89 per cent of CRE executives in India, compared to 72 per cent globally, are being challenged by their senior leadership to impact and add value to the productivity of their workplace. The report shows that a majority of CRE teams in India do not feel well equipped to address the increasing demands of senior leadership and are at risk of under-performing. However, India’s BPO culture nurtures the readiness to adopt outsourcing models and solutions making outsourcing the delivery of CRE services to external partners an increasingly accepted and cost effective solution for both global companies looking to expand into the country and Indian companies looking at domestic growth.
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The growth of eight infrastructure industries slowed down to 3.1 per cent in July, against 4.5 per cent in the same month last year, mainly due to contraction in crude oil and natural gas production. The growth in July, however, was higher than the previous month when the core sectors had expanded by just 0.1 per cent. The infrastructure sector - coal, crude oil, oil refinery, natural gas, steel, cement, electricity and fertilisers - accounts for 37.9 per cent of India's industrial output, which expanded just 1 per cent during the last fiscal year. Crude oil and natural gas production contracted by 2.3 per cent and 16.1 per cent respectively in July, according to the official data released today. Petroleum refinery production expanded by 5.1 per cent in the month against 26 per cent in July 2012. Steel production grew by 7 per cent, while cement output was up by 0.8 per cent in July this year. Coal and electricity production slowed down by 1.2 per cent and 5.2 per cent as against 2 per cent and 2.7 per cent respectively in July 2012. Fertiliser output grew by 0.4 per cent in July. During April-July period, the growth of eight infrastructure industries slowed to 1.9 per cent from 6.3 per cent in the same period last year. The growth was 3.9 per cent in 2012-13 as against 5 per cent in the previous financial year.(Agencies)
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Scrambling for remedies as investors' faith in India sagged, the government said last week it fast-tracked approval for a slew of infrastructure projects worth $28 billion: but the stroke of a pen in New Delhi will not be enough.The government hopes that speeding up the launch of hundreds of new power plants, highways and oil exploration blocks will breathe new life into an economy that has fallen off its perch as an emerging market high-flier.Growth in the latest quarter was the slowest since during the global financial crisis, and the rupee has tumbled ever deeper against the US dollar. Failing to get the projects off the ground would be another blow.However, there is no evidence to suggest that these projects will somehow sidestep the obstacles that have hobbled construction for years - from red tape and land acquisition battles to banks' unwillingness to lend to a risk-prone sector.Only a quarter of infrastructure projects are completed on time in the country, according to a 2012 report by Ernst & Young consultants.Financing will be one of the biggest challenges right now. The infrastructure sector is one of the biggest contributors to banks' growing bad loans, with outstanding debt of about $120 billion, and tight liquidity conditions mean debt-laden companies will find it tough to raise fresh funds."These new measures are much too wonderful to be true," said Eric Mookherjee, a Paris-based fund manager at Shanti India, which manages Indian stocks worth more than $300 million, including IRB Infrastructure Developers."Expediting approvals for the projects that were stalled for years is not going to start the machines from tomorrow morning," he said. "The issue with infrastructure in India is financing, and if liquidity is going to be sucked out of the market to support the rupee it will be very hard for the banks to fund these projects."Hoops And HurdlesAnil Swarup, a senior official in the prime minister's office who heads a group that monitors and helps steer projects already cleared, said no companies had complained to his group of a lack of progress. However, he accepted that a fast-tracked project still faced many hurdles, including wrangles over land acquisition and law-and-order problems at a state level."We cannot expect an overnight transformation," he said. "In any project, there would be a number of issues and ... until those are resolved, the project does not go on stream."One beneficiary of last week's project clearances by a cabinet panel was Essar Group, a diversified conglomerate with interests in power, oil and steel. After a 5-year wait, Essar was finally promised environmental approval to develop two coal blocks that will feed a power plant in the state of Jharkhand.The reaction of one company official, though, was lukewarm. The approval may have come through, but a timeline for when the company can actually start mining was still uncertain."Funding is linked to the environment clearance to the coal blocks, and banks will release funds once we have all the clearances. The announcement is a positive development, but we have got nothing in our hands, so we will progress on this once everything has been approved," said the official.Shivering RupeeIndia's track record for infrastructure development is miserable compared with China and most emerging market economies, and its failure on this score has sapped growth.The government has targeted spending of $1 trillion on new projects over the five years to 2017, but it has fallen short of previous funding and implementation goals, and much of the country is still plagued by power blackouts and bumpy roads.A land acquisition bill, which is aimed at speeding up infrastructure and industrial projects by giving farmers better compensation for selling their land, was passed in the lower house of parliament on Thursday.It takes about 295 days to acquire or lease public land in India, more than twice the global average, Standard Chartered wrote in a research note on Friday that cited World Bank data. Getting private land takes 99 days, versus a global average of 61 days.Despite New Delhi's best efforts to get infrastructure moving, the problem appears to be getting worse. The percentage of total projects delayed on account of land acquisition-related issues more than trebled to 11.3 percent as of March 2013 from six years ago, the note said."How can you run through these projects when land must be acquired before financial closure?" said a senior official at the Planning Commission on clearances. "You can't talk things up. Look at the rupee, it's shivering."The Federation of Indian Chambers of Commerce and Industry was scathing about the bill, which will replace colonial-era legislation, saying that not only will land cost more, the process of acquiring it will be stretched by 4-5 years.Stopping The RotThe government's Cabinet Committee on Investment (CCI), set up by Prime Minister Manmohan Singh in January, was charged with stopping the rot by solving inter-departmental disputes and speeding up clearances, especially environment and fuel permits.Among its successes, the committee ended a 14-year saga involving NTPC, the country's largest power producer, and Coal India, the world's biggest coal miner, over the construction of a 1,980 MW power project.NTPC was initially granted permission to build the plant in Jharkhand, but then Coal India claimed the site after coal reserves were discovered underneath it. After years of dispute and the establishment of a committee headed by a top civil servant to look into the case, the CCI ruled in favour of NTPC.However, NTPC still had more hoops to jump through before it could finally issue equipment tenders. It had to move the construction site by about 300 metres, and because environmental clearances had expired they had to be obtained again.Such hurdles are typical in India, where the average project needs 56 separate permissions that can take two years to obtain.Vinayak Chatterjee, head of the Feedback Infra consultancy, said the clearances were a positive step, but resistance from ministries keen to guard their veto rights has watered down the CCI's powers."The CCI was originally conceived as a National Investment Board ... and that was supposed to be a far more powerful body which would have been empowered to give clearances," he said. "The CCI does not have statutory powers to override line ministries. So effectively it has become a pressure and coordinating body.""I think the line ministries felt uncomfortable about their powers being taken away, as usual," he said, referring to those ministries in the line of approvals needed for such projects.For example, the committee can take a decision to nudge Coal India to provide fuel for a power project, but it cannot force the miner to do so, or stipulate a timeline for the supplies, an official at a major infrastructure group said."While the CCI has cleared the projects, there is no clear uptick in activity related to such projects," Barclays said in a June research note. "We believe that activity/investment related to such projects could remain subdued, given the weak momentum and sentiment in the economy - that is, the CCI clearance, per se, is not the 'game changer' the government sees it as being."(Reuters)
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India could save $8.5 billion in foreign exchange spending on crude oil imports in 2013-14 if it relied more on supplies from Iran, which is able to accept payment in rupees, Oil Minister M. Veerappa Moily said. In a letter to Prime Minister Manmohan Singh spelling out a strategy to curb foreign exchange outflow against a backdrop of a weak currency, Moily said India was likely to import about 13 million tonnes of oil from Iran in 2013-14. It has already imported 2 million tonnes so far in the fiscal year that began in April. "An additional import of 11 million tonnes during 2013-14 would result in reduction in forex outflow by $8.47 billion (considering the international price of crude oil at $105 per barrel)," the letter, seen by Reuters, said. The minister said total savings from a number of measures in the energy sector could be in the region of $20 billion. Moily's proposal chimes with the government's eagerness to boost imports from Tehran to help prop up the rupee, which saw its biggest monthly fall in at least 18 years in August. U.S. and EU sanctions placed on Iran over its nuclear programme have reduced its oil exports more than half from pre-sanction levels of about 2.2 million barrels per day (bpd). In the first half of 2013, imports of Iranian oil from its four biggest buyers - China, India, Japan and South Korea - fell more than a fifth from a year ago to around 960,000 bpd. The U.S. and European Union sanctions have pushed Tehran into accepting payment in rupees for some of its oil, and higher volumes could support the Indian currency. "Within the UN sanctions and fully complying with the sanctions, there may be more space for imports from Iran," Finance Minister P. Chidambaram said in August. In the first seven months of this year, India's imports from Iran have declined 46 percent from the same period last year to about 185,700 bpd, a trade data showed. India imported nearly 58 percent more oil from Latin America in the January to July period as its Iranian shipments dropped. Overall, Asia's third-largest economy shipped in 14.1 percent more oil in July than a year ago, while imports for the January-July period rose about 10.3 percent, the data showed. (Reuters)
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Oil minister Veerappa Moily said on Tuesday, 27 August that the Prime Minister has asked him to save $25 billion on oil imports in the current fiscal year, to help the country narrow its current account deficit (CAD).
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