Page last updated at 14:36 GMT, Friday, 27 March 2009

India boom threatened by slowdown

As the G20 summit in London draws closer, developing countries like India want to play a bigger role. Our India correspondent, Damian Grammaticus, has been to the booming city of Gurgaon near Delhi to gauge the scale of India's economic progress.

New construction is everywhere
New construction is everywhere

To see India's incredible economic transformation happening in front of your eyes, you only need to take a short drive out of the capital down national highway 8.

On the edge of Delhi they're building the new India.

In just a decade an entire new city, Gurgaon, has risen above the dusty plain.

Giant office blocks and commercial complexes have sprung up.

You name it: just about every impact of the global recession has been good for us
Ajay Agrawal, Chief Solutions Officer, UnitedLex

Glass and concrete towers reach into the hot, hazy sky.

Cement trucks and diggers trundle to and fro. Workers perch high on half-finished buildings.

Already the roads are choked with traffic.

Gurgaon is where India has bought into globalisation.

Shopping malls

There are massive shopping malls, full of brands imported from abroad, lured by the promise of a huge new market among India's billion people.

Ambience Mall cost $200m (£140m) to build and opened just 18 months ago.

G20 LONDON SUMMIT
World leaders will meet next week in London to discuss measures to tackle the downturn. See our in-depth guide to the G20 summit.
The G20 countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the US and the EU.

It boasts that it is 1.5 kilometres long, lined with brand names like Marks & Spencer, The Body Shop and Esprit.

You could be anywhere, in London, Paris, or Hong Kong. This is Western consumer culture rising in the east.

Almost one million people a month pass through Ambience Mall.

But the global downturn is now being felt here.

Already some shops have had to close.

"The recession has hit India," says one shopper, " we are spending wisely."

"Now if there are no discounts then we are buying less," says another.

Growth slowdown

Shopping malls have sprung up in the new city
Shopping malls have sprung up in the new city

Joining the global economy propelled India to incredible levels of growth, 9% in recent years.

But it's now slipping, and has fallen to nearer 6%.

And while that's far better than most major economies, concern is growing about how long the worldwide downturn will last.

"Global sentiments are down, that is why the Indian economy is down," says Raj Singh Gehlot, the chairman and managing director of Ambience Limited.

"There's no sub-prime crisis here. India has a great economy. Shops are making money, Indians have savings. The problem is that expected revenues are not being met."

Worries about the global economy are making Indians reluctant to spend too.

And adding to the uncertainty there's India's upcoming general election.

Until the outlook for India is clear, consumers and businesses are likely to remain cautious about parting with their cash.

Factory workers

And on the back streets of Gurgaon there are more signs of the way the world's woes are hitting India .

Textile workers face an uncertain future
Textile workers face an uncertain future

At 9AM a siren wails and workers flood through the gates of Orient Craft's garment factory.

An inexhaustible supply of cheap labour gives India a comparative advantage.

But as recession bites in the rich world, workers here are feeling the squeeze.

So left outside are the unemployed, queuing patiently, hoping for work.

M D Sabbir Ansari, a tailor, says he hasn't had a single day's pay in three months.

"When we go to factories looking for work we're told there are no vacancies. Day after day it's the same story," he tells me.

Today M D Sabbir Ansari is lucky - he's invited in to the factory.

It's a single day's work, filling an empty seat. Tomorrow he'll be back waiting at the gate.

Hot and cramped

Inside Orient Craft's factory hundreds of workers are busy, sewing, stitching, ironing and packing clothes for western shops.

It's hot and cramped. The company employs 25,000 people, with the minimum wage of $50 a month.

Textile factory owner
This is what you taught the world, to be a global player, to open the doors
Sudhir Dhingra, chairman, Orient Textiles

Orient Craft hasn't laid off staff, but its Chairman, Sudhir Dhingra, say:

"This (downturn) is the real bad one. Prices are down, profits are down. I know friends of mine who have had to close down factories, to cut production."

And he's worried, that in these tougher times, G20 leaders meeting in London next week might be tempted to protect their own economies at the expense of others.

So he has a message for rich countries.

"If you claim to be the true leaders it's time to demonstrate that, " he says. "It's an interlinked world.

"This is what you taught the world, to be a global player, to open the doors. Now that it's hurting they should not shy away from their responsibilities of carrying the entire world with them. They should not think only of their own countries."

Call centres

And while for those with few skills times are tough, some in Gurgaon are doing well, particularly India's outsourcing firms, which provide services for Western firms ranging from call centres to legal and medical work.

Call centre workers
Business is booming for outsourcing of legal services

In a hushed, modern office in a gleaming glass tower, lines of lawyers sit at computer terminals.

UnitedLex provides cheap legal services for companies as far away as Britain and America.

One of its specialities is mergers, bankruptcies and liquidations.

As banks and businesses have failed in the rich world, so demand for UnitedLex's services has soared.

It has grown from 100 employees to 400 in little more than a year.

"I don't want to sound as if I am happy with other people's misfortune," says Ajay Agrawal the Chief Solutions Officer at UnitedLex, "but it's been a phenomenal year for us."

"You name it: just about every impact of the global recession has been good for us."

Outside his window another office block is being put up.

Many nations would be envious of India's position.

It's still growing despite the rich world's recession.

But India isn't immune, as its growth is slowing, and business leaders are worried.

What India wants now is for the G20 to find a way to kick start global growth.



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