Who is a FII and what are these PNs?

A foreign institutional investor (FII) means an entity established or incorporated outside India which proposes to make investments in India. To ensure that such funds are not just a front for one wealthy individual, the government has prescribed that an FII must be a broad-based fund.

What is a broad-based fund?

A broad-based fund means a fund established or incorporated outside India, which has at least 20 investors with no single individual investor holding more than 10% shares or units of the fund. But if the fund has institutional investors like banks or a pension outfit or a similar established entity, then it shall not be necessary for the fund to have 20 investors. However, if the fund has an institutional investor holding of more than 10% of shares or units in the fund, then the institutional investor must itself be a broad-based fund.

What is a sub-account?

A sub-account includes those foreign corporate, foreign individuals, and institutions, funds or portfolios established or incorporated outside India on whose behalf investments are proposed to be made in India by an FII.

Similarly, a designated bank means any bank in India which has been authorised by the RBI to act as a banker to an FII. There is also a domestic custodian, which is an entity registered with the Sebi to carry on the activity of providing custodial services in respect of such securities.

What sort of entities can be registered as an FII?

Under the Sebi (FII) Regulations, 1995, the following entities and funds are eligible to get registered as FII. This include pension funds, mutual funds, insurance companies, investment trusts, banks, university funds, endowments, foundations, charitable trusts and charitable societies. The Sebi (FII) Regulations, 1995, also says the following entities proposing to invest on behalf of broad-based funds are also eligible to be registered as FIIs. These are asset management companies, institutional portfolio managers, trustees, and power of attorney holders.

On what basis does Sebi decide on an FII applicant’s eligibility?

The parameters analysed include the applicant’s track record, professional competence, financial soundness, experience, general reputation of fairness and integrity. (The applicant should have been in existence for at least one year) and also whether the applicant is registered with and regulated by an appropriate foreign regulatory authority in the same capacity in which the application is filed with the Sebi whether the applicant is a fit & proper person.

Who can get registered as a sub-account?

Institutions or funds or portfolios established outside India, whether incorporated or not, proprietary fund of FIIs, foreign corporates and foreign individuals. An FII should apply on behalf of the sub-account. Both the FII and the sub-account are required to sign the sub-account application form.

The maximum limit of FII investment in any company as of now is 10% of the total equity of the company. With the sub-accounts, the aggregate limit is 24%. For the sub-account registered under the foreign companies/individual category, the investment limit is fixed at 5% of the issued capital.

What sort of financial investments can a FII conduct?

They can now invest in almost every sort of products in the stock markets including primary and secondary markets. This comprise shares, debentures and warrants of companies, unlisted, listed or to be listed on a recognised stock exchange in India, units of mutual funds, dated government securities, derivatives traded on a recognised stock exchanges, and commercial papers.

What is a participatory note?

PNs are instruments used by FIIs, not registered in the country, for trading in the domestic market. They are a derivative instrument issued against an underlying security which permits the holder to share the capital appreciation or income from that security.

PNs are, therefore, like contract notes and are issued by FIIs to their overseas clients, who may not be eligible to invest in the Indian stock markets. PNs are used as an alternative to sub-accounts by ultimate investors, who prefer to avoid making disclosures required by various regulators.

The government has asked FIIs to wind down their exposure to such PNs and eliminate them from their books within five years. It is likely to be whittled down to three years.

The Future of Technology

The Big Trends Ahead and "Businessweek" magazine Ranking of the Top 100 Info Tech Companies

The Info Tech 100

For in-depth profiles click on company

1	America Movil
2	Hon Hai
3	LG Electronics
4	Google
5	Samsung
6	Apple Computer
7	Dell
8	Mobile Telesystems
9	Nextel Comms.
10	Infosys
11	High Tech Computer
12	Tata Consultancy
13	BT Group
14	Turkcell
15	Telefonica Moviles
16	Telefonica
17	China Mobile (Hong Kong)
18	Nokia
19	Bharti Tele-Ventures
20	Telekom. Indonesia
21	Western Wireless
22	Acer
23	Wipro
24	Nextel Partners
25	Telefonos de Mexico
26	Novatek Micro- electronics
27	Microsoft
28	NII Holdings
29	Asustek Computer
30	Western Digital
31	Accenture
32	Cognizant
33	Autodesk
34	Yahoo!
35	LM Ericsson
36	TPV Technology
37	Lam Research
38	Oracle
39	MEMC Electronic Materials
40	Motorola
41	Verizon Comms.
42	NIDEC
43	Lite-On Technology
44	IBM
45	France Telecom
46	Adobe Systems
47	KT
48	Powerchip Semi- conductor
49	Telecom Cp New Zealand
50	Seagate
51	CACI
52	Intel
53	Cisco Systems
54	Deutsche Telekom
55	VimpelCom
56	China Telecom
57	EMC
58	SAP
59	ASML Holding
60	Amphenol
61	NCR
62	Canon
63	Qualcomm
64	Atos Origin
65	Applied Materials
66	Texas Instruments
67	MiTAC International
68	Taiwan Semi- conductor Mfg.
69	First Data
70	Telus
71	L-3
72	Anteon
73	LG TeleCom
74	Research In Motion
75	SRA International
76	Logitech
77	Network Appliance
78	Advantest
79	Chi Mei Opto- electronics
80	ZTE
81	Activision
82	VeriSign
83	Ingram Micro
84	FIserv
85	Satyam Computer Services
86	KT Freetel
87	Tokyo Electron
88	BenQ
89	Marvell Technology
90	ATI Technologies
91	CommScope
92	Nikon
93	Compal Electronics
94	SunGard
95	Harris
96	Hoya
97	Anixter
98	KLA-Tencor
99	Symantec
100	SanDisk

India mantra still rules but,...

India continues to hold onto the top spot as the most attractive offshoring location of services such as information technology, business processes and call centres, according to a global management consulting firm.

India remains the best offshore location by a wide margin, even if wage inflation and the emergence of lower-cost countries decreased its overall lead, according to the annual ranking of consulting firm A T Kearney.

As far as China is concerned improved infrastructure and relevant people skills have increased its attractiveness as a low-cost option for servicing Asian markets.

The gap between India and the second-ranked country, China, is larger than the gap between the next nine countries combined.

But India's lead has shrunk slightly compared to 2004 mainly due to a slight reduction in India's financial attractiveness, the result of wage inflation in India and the emergence of new even lower-cost contenders--in Africa and South East Asia like Ghana and Vietnam.

China maintains its second place ranking and partially closes the gap with India largely to continued improvement in its infrastructure quality and the availability of relevant people skills.

It is being pointed out that for a growing number of Asian and Western multinationals, China remains the best choice for serving their growing operations throughout the East Asia region and a low-cost option for servicing established markets in Japan, Korea, Taiwan, Hong Kong and Singapore.

India is nowhere near tech leadership

ASHOK JHUNJHUNWALA, SANGAMITRA RAMACHANDER, ANURADHA RAMACHANDRAN

South Korea stands first among nations in broadband penetration globally. In terms of the ITU Digital Access Index, it ranks fourth, and in terms of the ITU Mobile Internet Index, it ranks seventh. 72.8% of its population use computers and 70% use the internet today.

While emphasising these facts at a recent talk in a World Bank seminar, Cheung Moon Cho of the Korea Agency for Digital Opportunity and Promotion (KADO) pointed out that in the early 1980s, its telecom infrastructure was very poor, with a 100% dependency on imported equipments and less than 7% tele-density. In a sense, South Korea’s position then was similar to India’s position in the early 1990s.

With a vision to become the 21st century IT Leader, South Korea, like India, carried out policy and regulatory reforms to introduce competition in telecom operations and to build strong telecom infrastructure. But there was a difference. It simultaneously took up the task of technology development. In the early 1990s, it took up the indigenous development of ADSL, digital TV and TFT-LCD technology. A few years later, it decided to back the development of CDMA mobile technology in Korea in order to become a leader in the field. When it found that its early partnership with Qualcomm was resulting in a significant royalty outflow from the country, it developed its own standard Wi-Bro, which would enable domestic companies like Samsung, LG and Hyundai to become wireless leaders in the world.

For Korea, telecom infrastructure and indigenous technology development were to be carried out concurrently, as it was recognised that this alone would make the nation strong. This is where the difference between Korea and India lies.

South Korea wants to emerge as a global leader in the 21st century and knows that leadership in technology is the key to this. It does not talk about “technology-neutrality” and did not hesitate in preventing the deployment of competing comparable technology (in this case, GSM) within the country. In fact, it continues to do so.

Promotion of one’s own technology and defining national standards so that companies from other countries can sell only by aligning with domestic standards and with local companies is not an approach unique to Korea.

The US did not allow GSM to enter its country for years, and Europe did not allow the operation of early generation CDMA within its territory.

Japan defined its own standards and did not allow either technology into the country. China in turn has now defined TDS-CDMA as a standard to benefit Chinese companies.

Developed countries and countries with a strong belief in their own capabilities seem to know how to use technology and standards for national benefit in this manner.

India, on the other hand, while making great strides in opening up the economy and building its telecom infrastructure since the mid-nineties, has paid little attention to how it can become a global technology leader.

The country still talks of “technology-neutrality” and continues to import everything lock-stock and barrel. This is so despite the fact that India has a much better established technology development capability compared to Korea, when it first set upon its task. The country still seems to believe that it can at best be a junior partner of multinationals from the West, who will continue to remain the technology leaders in future.

It is not surprising that CNR Rao, technology advisor to the Prime Minister, recently commented at a workshop, “Indians come nowhere near the Chinese and Koreans when it comes to patriotism.”

Over the past year, India appears to have started looking at how to develop its own capabilities, instead of being a 100% importer of telecom products.

In fact, companies like BSNL are contemplating having a certain fixed percentage of their purchase from indigenous technology.

This late realisation is, however, a mere beginning and the country must have confidence in the capabilities of its scientists and technologists and do much more if it is to emerge as a technology leader of the future.

The writers are from TeNet Group, IIT-Madras

China-India synergy spells new superpower

The global business landscape is set to be galvanised by the inherent potential of a synergy between China and India with their combined GDP to account for up to 20 per cent of the world's total by 2025 if two Asian giants agree on free trade, a study has said.

"The China-India business synergy is the tip of the iceberg of immense economic power," said Yuwa Hedrick-Wong, economic advisor to MasterCard International in Asia/Pacific.

"The new generation of joint China-India companies will change the competition landscape in global business. Any way you look at it, this synergy is set to change the world. However, the extent to which the two economies can be brought closer together would increase their impact," Hedrick-Wong said.

In one of its latest 'Insights Reports,' MasterCard points out that rather than viewing Chinese and Indian economies as competing, it is much more important to understand their potential business synergy.

The impact of a China-India business alliance will, however, catapult their corporate sector to be among the best in the world, the study said.

Multinationals around the world have already begun leveraging the respective comparative strengths of China and India.

China's manufacturing prowess is unrivalled and it is the world's factory. Juxtaposed against this, are India's strengths in R&D and high-tech services. With the ease of instantaneous communications and information flow, spatial and temporal distances between both countries are virtually non-existent, the report said.

"Therefore, some of the leading multinationals that operate in both China and India are combining their respective complementary strengths to create powerful competitive advantages for themselves," the report said.

"What the multinationals are doing today, Indian and Chinese companies will do tomorrow" suggests Hedrick-Wong.

"Imagine combining China's infrastructural and logistical efficiency and massive economies of scale with India's world class innovations capability, management know how, and corporate leadership; what you have are the makings of a business superpower of the 21st century.

"This emerging China-India business synergy will be able to tap into a huge reservoir of high quality human resources in China and India," the report said.

It said in 10 years' time, they will have a combined workforce of close to five million young knowledge workers who are under the age of 30, in cutting-edge fields of engineering and the life sciences. These are the kind of resources that the China-India business synergy can leverage in the future.

From a macro perspective, the China-India business synergy comes from economic efficiency gains when China's labour efficiency is combined with India's capital efficiency.

In 2004, for example, China's GDP per worker was about 55 per cent higher than that in India. On the other hand, capital efficiency in India is estimated to be around 45 per cent higher than that in China.

"Their combination is therefore an unbeatable formula," Hedrick-Wong said.

A closer look at the benefits of collaboration between both markets shows tremendous scope for mutual benefit.

Remittances: India is world no. 1

With record inflows of $21.7 billion, India is among the top three countries worldwide to receive the maximum amount of remittances followed by China and Mexico.

According to the World Bank Global Economic Prospects report for 2006, China received $ 21.3 billion and Mexico $18.1 billion in 2004.

While estimating the overall growth in South Asia at 6.9 per cent in 2005, up from 6.8 per cent in 2004, it said this year's performance reflects stable growth of about 7 per cent in India.

Of the other South Asian countries, the report said Pakistan received remittances worth $3.9 billion and Bangladesh $3.4 billion. Sri Lanka's remittance receipts were larger than tea exports, and in Nepal, remittances accounted for nearly 12 per cent of its GDP.

The report pointed out that remittances sent from developing countries - the 'South-South flows' - represent 30-45 per cent of total remittances. It forecasts that South Asia will be receiving some $32 billion in remittances this year or a 67 per cent increase from 2001.

Remittances recorded worldwide in 2005 are estimated to exceed $232 billion. Of this, developing countries are expected to receive $167 billion, more than twice the level of development aid from all sources, the report added.

The growth in South Asia, the report said is estimated at 6.9 per cent in 2005, up from 6.8 in 2004, while the regional GDP for 2006 is expected to slow to 6.4 per cent, adding this year's performance reflects stable growth of about 7 per cent in India, and a 6.6 per cent growth in Pakistan.

It pointed out that the overall impact of the October quake on growth in Pakistan is expected to be minimal.

This year's main focus has been on remittances and migration with the report noting that an increase in migrants would raise work force in high-income countries by 3% by 2025 and increase global income by 0.6%, or $56 billion.

"With the number of migrants worldwide now reaching almost 200 million, their productivity and earnings are a powerful force for poverty reduction," said Franis Bourguignon, World Bank chief economist and senior vice-president for development economics.

"Remittances, in particular, are an important way out of extreme poverty for a large number of people. The challenge facing policymakers is to fully achieve the potential economic benefits of migration, while managing the associated social and political implications," he added.

The GEP authors suggest that remittances sent through informal channels could add at least 50 per cent to the official estimate, making remittances the largest source of external capital in many developing countries. One of the GEP's recommendations has been to reduce formal remittance costs to enhance remittances flow.

The argument has been that reducing remittance costs would do more to encourage the use of formal remittance channels than will regulation of so-called informal services.

Americans think China will be superpower before India

A majority of American adults think that China, rather than India, would be a superpower in ten years with most more concerned about its military strength than its economic power, says a new survey. Currently, only two percent think India is a superpower but 20 percent believe it would attain that position in the next decade, the Harris poll showed.

However, 70 percent think China would a superpower in ten years, followed by the European Union (31 percent), Britain (25 percent), India and Russia (15 percent). Americans also appear to be relatively more concerned about the potential of economic and military growth in China than they are in the EU, India, Japan, Russia and Britain, the poll showed.

At present, 67 percent think the United States is an economic superpower, followed by Japan (30 percent), China (29 percent), Britain (18 percent), European Union (14 percent), Russia (6 percent) and India (2 percent).

The authors of the survey say it's worth noting that only 15 percent of adults think Russia will be a superpower in 10 years, adding this indicates how far Russia has slipped in the minds of Americans since the Cold War. However, more than half the respondents expressed extreme concern about China's military strength, the poll showed.

While just under half of American adults think that no country or regions will be stronger than the United States in 10 years, four in 10 (42 percent) think that China will be stronger than the United States.

About a quarter think that China would be weaker than the United States in 10 years. The proportion saying China will become stronger than the US is two to three times greater than the proportion saying other countries or regions such as Japan or the European Union will become stronger than the US.

Many economists, the authors say, feel that it is in the best interest of the US if economies of countries like China, India, and Russia grow.

However, US adults also express some concern. For example, 53 percent think that China will have a negative effect on the future of the US economy, as compared to 23 percent who think that China would have a positive effect.

Other countries perceived to have more of a negative effect than a positive effect on the future of the US economy include India and Russia, though for these countries, substantial numbers feel that the effect will be more neutral than either positive or negative.

India among top student providers to US universities

India continues to remain the top source of foreign students coming to the United States for higher studies for the fourth year in a row even though the total number of foreign students declined slightly in 2004-2005 compared to the previous year.

According to the latest Open Doors 2005 International Students in the United States report released Monday morning, India sent a total of 80,466 students to US to study in 2004-2005, up from 79,736 in 2003-2004, followed by China, Republic of Korea, Japan and Canada.

As a percentage of total foreign students in the US, which stood at 565,321, Indian students accounted for 14.2 per cent of all foreign students.

While 72 per cent of students from India studied at graduate level during the academic year, 20 per cent enrolled in undergraduate level and 7.2 per cent in other courses.

For the fourth year in a row, the University of Southern California, with 6,846 international students in 2004-2005, was the US university with the largest number of international students, followed by the University of Illinois at Urbana-Champaign, moving up from sixth place, followed by University of Texas at Austin, Columbia University and New York University.

The report noted that while India remains the largest sending country for the fourth consecutive year registering a modest one percent increase over the previous year's enrollments, the rate of growth of India is considerably slower than the double-digit increases experienced over the past three years 12 per cent in 2003-04, 23 per cent in 2002-03, and 29 per cent in 2001-02.

There was no immediate explanation for the slower growth rate of India. However, the report said that slight overall decline in international students enrolled in US colleges and universities has been because of several factors, including real and perceived difficulties in obtaining student visas especially in scientific and technical fields, rising US tuition costs, vigorous recruitment activities by other English-speaking nations, and perceptions abroad that it is more difficult for international students to come to the United States.

According to Allan E Goodman, President and Chief Executive Officer of the Institute of International Education, "Colleges and universities have been proactive in reaching out to international students to let them know that they are welcome here."

He said that strong recruitment, combined with more efficient and transparent student visa processes, have begun to stem the tide of decreasing international student enrollment. "We need to continue these concerted efforts to get the word out that our doors are open to international students, in order to attract the best and the brightest students from all over the world,' he said.

Commenting on the 2004 report of Professor Jane E Schukoske, executive director on International Educational Exchange with India said that the report sends a resounding message that the US continues to welcome students. "The increase in students going to the US for graduate studies reflects the fact that these students with focused career goals, are undeterred by misconceptions about access to the US universities and visas,' Schukoske said.

Mumbai's amazing dabbawalas

Four thousand five hundred semi-literate dabbawalas collect and deliver 175,000 packages within hours. What should we learn from this unique, simple and highly efficient 120-year-old logistics system?

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Hungry kya? What would you like: pizza from the local Domino's (30 minute delivery) or a fresh, hot meal from home? Most managers don't have a choice. It's either a packed lunch or junk food grabbed from a fast food outlet. Unless you live in Mumbai, that is, where a small army of 'dabbawalas' picks up 175,000 lunches from homes and delivers them to harried students, managers and workers on every working day. At your desk. 12.30 pm on the dot. Served hot, of course. And now you can even order through the Internet.

The Mumbai Tiffin Box Suppliers Association is a streamlined 120-year-old organisation with 4,500 semi-literate members providing a quality door-to-door service to a large and loyal customer base.

How has MTBSA managed to survive through these tumultuous years? The answer lies in a twin process that combines competitive collaboration between team members with a high level of technical efficiency in logistics management. It works like this...

After the customer leaves for work, her lunch is packed into a tiffin provided by the dabbawala. A color-coded notation on the handle identifies its owner and destination. Once the dabbawala has picked up the tiffin, he moves fast using a combination of bicycles, trains and his two feet.

A BBC crew filming dabbawalas in action was amazed at their speed. "Following our dabbawala wasn't easy, our film crew quickly lost him in the congestion of the train station. At Victoria Terminus we found other fast moving dabbawalas, but not our subject... and at Mr Bhapat's ayurvedic pharmacy, the lunch had arrived long before the film crew," the documentary noted wryly. So, how do they work so efficiently?

Team work

The entire system depends on teamwork and meticulous timing. Tiffins are collected from homes between 7.00 am and 9.00 am, and taken to the nearest railway station. At various intermediary stations, they are hauled onto platforms and sorted out for area-wise distribution, so that a single tiffin could change hands three to four times in the course of its daily journey.

At Mumbai's downtown stations, the last link in the chain, a final relay of dabbawalas fan out to the tiffins' destined bellies. Lunch hour over, the whole process moves into reverse and the tiffins return to suburban homes by 6.00 pm.

To better understand the complex sorting process, let's take an example. At Vile Parle Station, there are four groups of dabbawalas, each has twenty members and each member services 40 customers. That makes 3,200 tiffins in all. These 3,200 tiffins are collected by 9.00 am, reach the station and are sorted according to their destinations by 10.00 am when the 'Dabbawala Special' train arrives.

The railway provides sorting areas on platforms as well as special compartments on trains traveling south between 10.00 am and 11.30 am.

During the journey, these 80 dabbawalas regroup according to the number of tiffins to be delivered in a particular area, and not according to the groups they actually belong to. If 150 tiffins are to be delivered in the Grant Road Station area, then four people are assigned to that station, keeping in mind one person can carry no more than 35-40 tiffins.

During the earlier sorting process, each dabbawala would have concentrated on locating only those 40 tiffins under his charge, wherever they come from, and this specialisation makes the entire system efficient and error-free. Typically it takes about ten to fifteen minutes to search, assemble and arrange 40 tiffins onto a crate, and by 12.30 pm they are delivered to offices.

In a way, MTBSA's system is like the Internet. The Internet relies on a concept called packet switching. In packet switched networks, voice or data files are sliced into tiny sachets, each with its own coded address which directs its routing.

These packets are then ferried in bursts, independent of other packets and possibly taking different routes, across the country or the world, and re-assembled at their destination. Packet switching maximises network density, but there is a downside: your packets intermingle with other packets and if the network is overburdened, packets can collide with others, even get misdirected or lost in cyberspace, and almost certainly not arrive on time.

Elegant logistics

In the dabbawalas' elegant logistics system, using 25 kms of public transport, 10 km of footwork and involving multiple transfer points, mistakes rarely happen. According to a Forbes 1998 article, one mistake for every eight million deliveries is the norm. How do they achieve virtual six-sigma quality with zero documentation? For one, the system limits the routing and sorting to a few central points. Secondly, a simple color code determines not only packet routing but packet prioritising as lunches transfer from train to bicycle to foot.

Who are the dabbawalas?

Descendants of soldiers of the legendary Maharashtrian warrior-king Shivaji, dabbawalas belong to the Malva caste, and arrive in Mumbai from places like Rajgurunagar, Akola, Ambegaon, Junnar and Maashi. "We believe in employing people from our own community. So whenever there is a vacancy, elders recommend a relative from their village," says Madhba, a dabbawala.

"Farming earns a pittance, compelling us to move to the city. And the tiffin service is a business of repute since we are not working under anyone. It's our own business, we are partners, it confers a higher status in society," says Sambhaji, another dabbawala. "We earn more than many padha-likha (educated) graduates," adds Khengle smugly.

The proud owner of a BA (Hons) degree, Raghunath Meghe, president of MTBSA, is a rare graduate. He wanted to be a chartered accountant but couldn't complete the course because of family problems. Of his three children, his daughter is a graduate working at ICICI, one son is a dabbawala and the younger son is still studying.

Education till standard seven is a minimum prerequisite. According to Meghe, "This system accommodates those who didn't or couldn't finish their studies. It's obvious that those who score good marks go for higher education and not to do this job, but we have people who have studied up to standard twelve who couldn't find respectable jobs." There are only two women dabbawalas.

Apart from commitment and dedication, each dabbawala, like any businessman, has to bring some capital with him. The mini-mum investment is two bicycles (approximately Rs 4,000), a wooden crate for the tiffins (Rs 500), at least one white cotton kurta-pyjama (Rs 600), and Rs 20 for the trademark Gandhi topi.

Competitive collaboration

MTBSA is a remarkably flat organisation with just three tiers: the governing council (president, vice president, general secretary, treasurer and nine directors), the mukadams and the dabbawalas. Its first office was at Grant Road. Today it has offices near most railway stations.

Here nobody is an employer and none are employees. Each dabbawala considers himself a shareholder and entrepreneur.

Surprisingly MTBSA is a fairly recent entity: the service is believed to have started in the 1880s but officially registered itself only in 1968. Growth in membership is organic and dependent on market conditions.

This decentralised organisation assumed its current form in 1970, the most recent date of restructuring. Dabbawalas are divided into sub-groups of fifteen to 25, each supervised by four mukadams. Experienced old-timers, the mukadams are familiar with the colors and codings used in the complex logistics process.

Their key responsibility is sorting tiffins but they play a critical role in resolving disputes; maintaining records of receipts and payments; acquiring new customers; and training junior dabbawalas on handling new customers on their first day.

Each group is financially independent but coordinates with others for deliveries: the service could not exist otherwise. The process is competitive at the customers' end and united at the delivery end.

Each group is also responsible for day-to-day functioning. And, more important, there is no organisational structure, managerial layers or explicit control mechanisms. The rationale behind the business model is to push internal competitiveness, which means that the four Vile Parle groups vie with each other to acquire new customers.

Building a clientele

The range of customers includes students (both college and school), entrepreneurs of small businesses, managers, especially bank staff, and mill workers.

They generally tend to be middle-class citizens who, for reasons of economy, hygiene, caste and dietary restrictions or simply because they prefer whole-some food from their kitchen, rely on the dabbawala to deliver a home cooked mid-day meal.

New customers are generally acquired through referrals. Some are solicited by dabbawalas on railway platforms. Addresses are passed on to the dabbawala operating in the specific area, who then visits the customer to finalize arrangements. Today customers can also log onto the website www.webrishi.com to access the service.

Service charges vary from Rs 150 to Rs 300 per tiffin per month, depending on location and collection time. Money is collected in the first week of every month and remitted to the mukadam on the first Sunday. He then divides the money equally among members of that group. It is assumed that one dabbawala can handle not more than 30-35 customers given that each tiffin weighs around 2 kgs. And this is the benchmark that every group tries to achieve.

Typically, a twenty member group has 675 customers and earns Rs 100,000 per month which is divided equally even if one dabbawala has 40 customers while another has 30. Groups compete with each other, but members within a group do not. It's common sense, points out one dabbawala.

One dabbawala could collect 40 tiffins in the same time that it takes another to collect 30. From his earnings of between Rs 5,000 to Rs 6,000, every dabbawala contributes Rs15 per month to the association. The amount is utilised for the community's upliftment, loans and marriage halls at concessional rates. All problems are usually resolved by association officials whose ruling is binding.

Meetings are held in the office on the 15th of every month at the Dadar. During these meetings, particular emphasis is paid to customer service. If a tiffin is lost or stolen, an investigation is promptly instituted. Customers are allowed to deduct costs from any dabbawala found guilty of such a charge.

If a customer complains of poor service, the association can shift the customer's account to another dabbawala. No dabbawala is allowed to undercut another.

Before looking into internal disputes, the association charges a token Rs 100 to ensure that only genuinely aggrieved members interested in a solution come to it with their problems, and the officials' time is not wasted on petty bickering.

Learnings

Logistics is the new mantra for building competitive advantage, the world over. Mumbai's dabbawalas developed their home-grown version long before the term was coined.

Their attitude of competitive collaboration is equally unusual, particularly in India. The operation process is competitive at the customers' end but united at the delivery end, ensuring their survival since a century and more. Is their business model worth replicating in the digital age is the big question.

Tamil Nadu: Best place to do business among Indian states

Last year, Laveesh Bhandari and I started an exercise of ranking Indian States on economic freedom. Such studies exist at the cross-country level. They are rarer at sub-regional levels and have not been attempted in India earlier.

This is about economic freedom. It is not about political freedom or social freedom. Had we attempted to capture these other categories, as opposed to economic freedom, we would have used different variables.

In the work that Laveesh and I do on Indian states, we have never used responses to questionnaires. Our rankings, including this one, are based on officially published government data. And because such data aren't always available for every state, we couldn't rank all 35 states and union territories last year.

We ranked 20 last year. And this year too, we are stuck with 20. Our 2004 rankings resulted in some controversy in the first half of 2005, chiefly because people hadn't bothered to read what we had actually done. This is a brief preview of this year's rankings.

The entire study will be in the public domain in a few weeks. The time-line for data used this year is mostly 2002-03. In some instances, it is 2004 or 2005. And in rare instances (judicial data), it is 1998-2002. Had later data been available, we would have used that.

Broadly, there are three heads for measuring economic freedom -- size of government (revenue expenditure, administrative component in state domestic product, power subsidy, government share in organised employment, taxes, stamp duties, divestment); legal structure and security of property rights (stolen property recovered, violent crimes, economic crimes, vacant judiciary posts, completion of investigations by police, completion of trials by courts); and regulation of credit, labour and business (minimum wages, man-days lost in strikes and lockouts, share of unorganised labour force, number of SEZs, license fees for traders, market fees, implementation of Industrial Entrepreneurs' Memorandum, power shortages, pendency of cases and persons arrested under corruption-related laws). All variables are naturally normalised.

Rarely have we been criticised for commission of variables. We have often been criticised for omission or non-inclusion of variables.

Composite ranks for economic freedom of states 2005
State 2005 Rank 2004 Rank 2005 Index 2004 Index Tamil Nadu 1 5 0.515 0.371 Gujarat 2 1 0.450 0.404 Kerala 3 3 0.447 0.374 Andhra Pradesh 4 2 0.381 0.377 Madhya Pradesh 5 9 0.374 0.332 Haryana 6 8 0.366 0.348 Jharkhand 7 16 0.354 0.294 Uttar Pradesh 8 13 0.347 0.303 Karnataka 9 12 0.337 0.309 Maharashtra 10 6 0.335 0.365		State 2005 Rank 2004 Rank 2005 Index 2004 Index West Bengal 11 14 0.335 0.299 Rajasthan 12 7 0.335 0.348 Himachal Pradesh 13 15 0.317 0.296 Jammu & Kashmir 14 10 0.311 0.328 Orissa 15 11 0.295 0.316 Punjab 16 17 0.290 0.292 Chhattisgarh 17 4 0.266 0.373 Bihar 18 19 0.240 0.265 Uttaranchal 19 18 0.224 0.276 Assam 20 20 0.218 0.222

But in all such instances, when additional variables are suggested, we find that objective data across all states don't exist. Although data are objective, there is minor subjectivity in our rankings. This concerns weights attached to variables, required for aggregation.

However, when we use alternate methods of weighting, we find the state scores don't change that much. The ranks do. This is a point that needs emphasis. People are obsessed with state ranks. What is important is scores that drive the ranks. A difference in ranks may be due to a marginal difference in scores. But it may also be due to a significant difference in scores.

There are, thus, three sets of scores and ranks, one for each head. On size of government, Jharkhand and Gujarat are at the top and Uttaranchal is at the bottom. On legal structure and security of property rights, Tamil Nadu is at the top and Bihar is at the bottom.

Finally, on regulation of credit, labour and business, Kerala is at the top and Chhattisgarh is at the bottom. In reporting scores under these heads, we have reported aggregation of variables using equal weights. Space limitations prevent detailed reproduction of tables under these three heads.

Instead, we report the overall or composite table, obtained by aggregation of scores across the three heads. Tamil Nadu tops the list and Assam is at the bottom. The scores show that Tamil Nadu is at the top by a significant magnitude and Assam (at the bottom) is also a fair distance away from Uttaranchal. Explanation as to why a state performs the way it does, lies in the movement of individual variables.

However, most movements concern legal structure and security of property rights. The impact of size of government is less palpable. And there is little change due to regulation of credit, labour and business, except for declines in Rajasthan and Chhattisgarh.

For comparisons, the table also reproduces the 2004 ranks and scores. One notices significant improvements in Tamil Nadu, Madhya Pradesh, Jharkhand, Uttar Pradesh, Karnataka and West Bengal and significant deterioration in Maharashtra, Rajasthan, Jammu and Kashmir, Orissa and Chhattisgarh.

Indeed, one should flag not only the deterioration in ranks, but the absolute decline in scores in states like Maharashtra, Rajasthan, Jammu and Kashmir, Orissa, Punjab, Chhattisgarh, Bihar, Uttaranchal and Assam.

Governance, and its lack, is an elusive concept and any equation of good governance with economic freedom can be debated. However, economic freedom is about personal choice, voluntary exchange, freedom to compete, protection of person and property and availability of legal and monetary arrangements that not only protect property rights of owners, but also ensure enforcement of contracts.

From this perspective, greater economic freedom should be the objective of governance and on this account, there is no evidence of convergence across India's states.

Bollywood comes to Korea

Bollywood filmmakers are famous for their constant search for new and exotic locations as backdrops for their films.

The latest destination is Korea where Mahesh Bhatt's new film, Gangster is being shot.

The first Indian film to win this honour stars Emraan Hashmi, Shiney Ahuja and newcomer Kangana Ranaut. And the entire crew is clearly enjoying this first of its kind experience in Seoul.

From the picturesque Han river bank in Seoul to the city's biggest fish market -- the Jongno fisheries. Also, from popular markets Myondong and Insadong and the Namdemun and the Tomdemun gates.

"We see it as cultural exchange. This will encourage more Indians to come to Korea," says Yang Rae Kim, Director-General, KOFACE.

Given the popularity of Bollywood films across the globe, the Koreans hope this will change the perception of the country being primarily a business destination and instead give the tourism industry a boost.

India's billionaires have never had it so good

India's billionaires have never had it so good.

The collective net worth of Business Standard Billionaires has gone up 71 per cent to Rs 3.64 trillion from Rs 2.13 trillion last year after computing current wealth on the basis of average market prices for promoters' stocks in August 2005.

As a matter of fact, the bull run in equities has meant that the Business Standard Billionaire Club membership has swollen a huge 80 per cent, from 178 last year to 311. Owing to a broad-based market rally, even the promoters of small and medium firms have seen their net worth zoom.

That is the reason why as many as 133 new entrants, two-thirds of them entirely self-made, have been able to make their way through the portals of The Billionaire Club.

These newcomers added over Rs 200 billion to their collective net worth last year, taking their aggregate wealth to over Rs 395 billion, according to BS Billionaire Club, which annually ranks the wealth of India's billionaires.

Mirroring the market's broad-based rally, billionaires now come from a wide variety of sectors.

India's richest moguls continue to come from software and other services sectors, while pharmaceuticals, steel, automobile and diversified businesses are other segments that have spawned a large number of billionaires.

Similarly, the new entrants are from sectors as varied as construction, retailing, sugar, media, services, engineering, information technology and pharmaceuticals.

Wipro Chairman Azim Premji remains India's wealthiest billionaire. Premji has added Rs 9,346 crore to his wealth this year, taking his net worth to Rs 41,888 crore.

He has topped the list six times in the last seven years, being briefly dismantled by the Ambani brothers in 2003.

Mukesh and Anil Ambani are in the second place, with a combined net worth of Rs 37,695 crore. Though the Reliance business empire split on June 18 this year, The Billionaire Club has taken their combined net worth into count as the formal process of splitting is still on.

Telecom magnate Sunil Mittal is ranked number three, with wealth of Rs 26,293 crore. HCL Technologies' Shiv Nadar, in the fourth slot, has ridden the technology boom with a 46 per cent rise in his net worth to Rs 12,390 crore.

Sun Pharma's Dilip Shanghvi takes the fifth position, up from sixth last year. He has added Rs 31.8 billion to his net worth to Rs 8,245 crore. Shanghvi has been ranked just above Naresh Goyal of Jet Airways, who debuts on the list after the airline's public float.

Goyal is also the wealthiest new billionaire, with a net worth of Rs 8,100 crore. Ranbaxy promoters Malvinder and Shivinder Singh have slipped from the fifth position they held last year to the seventh position this year.

Indians most committed love-makers

When it comes to making love, Indians are not only the safest but are also the most committed to their partners and do not find their sex life monotonous, according to Durex Global sex survey.

The survey conducted by the world’s leading condom brands aid Indians have had least unprotected sex without knowing their partners sexual history with 21 per cent, as compared to the global average of 47 per cent (Norwegians 73 per cent and Greeks 70 per cent are most likely to have unsafe sex without knowing their partners sexual history).

As far as the number of sexual partners are concerned, Indians had the fewest with an average of three as compared to nine globally. Turks with an average of 14.5 partners have had more sexual partners than any other nationality in the world.

That Indians are committed to their partners is vindicated by the fact that only 13 per cent of them have had one-night stands, which is the least compared to 44 per cent worldwide, it said.

The survey, which interviewed over 3,17,000 people from41 countries, including India, said apart from being the safest love-makers very few Indians find their sexual relationship with their partner monotonous.

Only three per cent of Indians experienced monotony in sex compared to seven per cent globally. While 46 per cent of Indians said they were happy with their sex lives compared to 44 per cent globally.

Indians were rated slow when it came to losing their virginity at an average age of 19.8 years as compared to 17.3 years, the average age when people had sex for the first time worldwide, the survey said.

People from Iceland have sex younger than any other country (15.6) followed by the Germans (15.9) and Swedes (16.1), it said.

Believing in safe sex, however, did not deter Indians in seeking sexual contentment. Pornography (37 per cent) and pleasure enhancing condoms (28 per cent) are the top two sexual enhancers preferred by Indians. Globally, 23 per cent voted in favour of pleasure enhancing condoms.

Indians, like many other nationalities around the world, believe that HIV/AIDS was the most important area that needed greater public awareness. While 87 per cent of Indians voted it as a top priority area, which needed greater awareness in the society, 72 per cent of people globally felt so.

Therefore, a majority of Indians (47 per cent) felt that government should be investing in sex education in schools while 34 per cent around the world believed so, the survey said.

Why is the Indian economy doing so well?

The gap between commentary and performance could hardly be starker. As the UPA government enters its middle period, the absence of political support for economic reform has been widely noted. Bimal Jalan and Pratap Bhanu Mehta have both offered articles to this effect in the pages of the Financial Times. The same sentiment was also the burden of a recent leader and cover story in The Economist, and has been a consistent theme of many leaders and opinion pieces, including the writings of Surjit Bhalla, Shankar Acharya and T N Ninan, editor of Business Standard.

The economy refuses to take notice. This is clear on a perusal of the Mid-Term Review 2005-06 of Macroeconomic and Monetary Developments put out by the Reserve Bank of India on October 25. Published concurrently with the semi-annual monetary policy review by Governor Reddy, this marvellous publication keeps improving in scope, conciseness, currency and presentation.

The good news is perhaps well-known, but bears retelling. Real GDP growth for the fiscal's first quarter is 8.1 per cent, including 10.1 per cent for industry and 9.6 per cent for services. Within industry, manufacturing is on a tear, growing at 11.3 per cent. Merchandise export growth has been strong: up 25 per cent from April to August in US dollar terms, and broad-based both in commodity composition and in destination market.

Perhaps even more important for the health of the economy has been the continued buoyant growth of non-oil imports (29 per cent in the fiscal till September), within which capital goods imports have grown even faster. As the Review notes, the return to a trade deficit has assisted the job of liquidity management, allowing the RBI to dispense with the market stabilisation scheme and to use its more conventional tools of open market operations.

Forward-looking variables, namely the various business sentiment surveys, the stock market and indicators of investment performance are all buoyant. Even the news on the fiscal front is relatively encouraging, although even more could be demanded given the strength of the economy.

The most important indicator of our ability to avoid a debt trap is the consolidated primary deficit of the central government and the states. (The primary deficit represents the gross fiscal deficit less interest payments. Improvements in this ratio indicate that interest payments are at least partially being met from current revenues, rather than exclusively through fresh borrowing.)

The projected outcome this year is of a primary deficit of 1.7 per cent of GDP, roughly half the figure of four years ago. Importantly, progress is being made both at the Centre and in the states.

Of course, more needs to be done: with the fiscal deficit for the current year projected at 7.7 per cent, the implied interest burden on the public finances is 6 per cent of GDP. This is a significant source of inflexibility in the Budget and crowds out productive recurrent expenditures. But if fast growth continues and the framework of the Fiscal Responsibility and Budget Management Act is honoured, this ratio should come down in due course.

What lies behind this good news?

Clearly, international developments have been very important. Stimulative fiscal and monetary policies, particularly in the US and Japan, the two largest industrial countries, have touched off a global boom.

But India has been much better prepared to seize these opportunities than in the past, because of its greater integration with the world economy, both through trade and through finance.

On the trade side, I do not think it is coincidental that the investment revival has occurred only after we resumed the process of reducing industrial tariffs in the last couple of budgets.

As is the case with proposals to liberalise FDI in the retail sector today, we were warned that the Indian consumer goods industry would be devastated if liberal trade were permitted, and only removed quantitative restrictions on such imports after an adverse judgment by a WTO tribunal. Yet, even with the process still incomplete, and India remaining one of the most heavily protected economies in the world, we find our manufacturing sector flourishing.

While the benefits of trade reform are perhaps well recognised by scholars, the benefits of financial integration remain more controversial. Yet it seems difficult to deny the benefits of such integration in the Indian case when we see the improvement in corporate governance that has been established through the modernisation of our equity markets. The role of foreign institutional investors in this process has been critical. As the MTR points out, the integration between domestic and international money markets is also proceeding apace, admittedly shielded by some remaining capital controls.

Greater international integration has therefore been enormously beneficial for the Indian economy. Yet, agreeably, we still enjoy a relatively balanced economy when compared with several of our Asian neighbours.

In particular, demand is better distributed between domestic and foreign sources, and between consumption and investment. Indeed at a conference in China at the end of last month, the governor of the Chinese central bank indicated that stimulating domestic consumer demand is one of their major challenges. This is also an issue for both Japan and Korea.

Complementing our external reforms have been the reforms in our tax system. These too are only partially complete, but they have been in train long enough to have made a difference. The adoption of a state-level value-added tax is another step on this journey, although again there is a long way to go before we reach the desired national goods and services tax. But the direction is clear, and, as with trade policy, seems to enjoy bipartisan consensus.

While the above sounds complacent, it is not meant to be. Instead, my argument is that getting a few big things right has generated large returns. Since we are only part of the way both in openness and tax reform there is every reason to stay the course. But backsliding in either area could equally be highly damaging.

There is a further area that needs to be pursued, which is redefining the role of the state in economic management. As we have seen, the present compulsions of coalition policies make this a difficult area to pursue at present. But the debate must be continued. Were we to achieve a similar national consensus in this third critical area, India truly could amaze the world.

Globe-trotting Indians all set to scale new records

With the economy booming and levels of disposable income on the rise, Indians are globe-trotting like never before. For countries across the Asia Pacific, this year promises to break all records in tourist arrivals from India.

While the biggest destination for Indians heading South-East, Singapore, has already seen an increase of 24 percent so far, the jump has been even more pronounced for destinations like Sri Lanka, Malaysia and Australia.

"We have had 40 percent more visitors from India this August and we easily expect the number to break all records this year," says Maggie White, regional manager for South and South Asia for Tourism Australia.

Enthused by the response, the Australian government has even drawn out a comprehensive plan for increasing the number of Indians landing upon the shores down under, divided almost equally into students, holidayers and business-travellers.

"We have classified India, China and Indonesia as the markets of the future in the region," White adds, "with overall Indian visitors poised to grow at a 14.2 percent for the next 14 years. But within this, both tourists and academic visitors have been growing at a higher pace of around 30 percent."

But while the total number of Indians expected to visit Australia is expected to touch about 65,000 this year, up from last year's 55,000, Singapore, the biggest market in the region, is expecting the number of visitors to go up to five lakh anytime this year.

With holidayers and business visitors making up nearly 90 percent of the 4.71 lakh Indian visitors to the state last year, the shopper's paradise has already seen an increase of 24 percent in visitor arrivals from the country this year.

With nearly 4.27 visitors in the first nine months alone, the country is expected to welcome anywhere between 5.7 to 6 lakh Indian visitors during 2005.

"I think it has to do with two things," says Rebecca Lim, Singapore Tourism's Regional Director in Mumbai, "One is the booming economy and the second is the fall in airfares...You can easily buy a return ticket to Singapore for around Rs 10,000, much less than the fares to many parts within the country."

Other destinations that have seen record-breaking arrivals from India are Malaysia and Srilanka.

Both countries are already charting virgin territory with the latter witnessing a 32 percent jump in the number of Indian visitors while Malaysia, a hot favourite for honeymooners, seeing a 27.5 percent increase.

While Srilanka saw nearly 73,000 visitors from India in the first eight months, its eastern neighbour saw nearly double the number, around 1.52 lakh Indian visitors.

5 best openers in Kollywood!

In one-day cricket, an opening batman who can hit all round the stadium in the first 15 overs of the game is very crucial for the team’s victory! The best openers in the world are Adam Gilchrist, Sanath Jayasurya, and our own Sachin Tendulkar. They can not only dictate terms but also change the course of the match.

Similarly in Tamil cinema, there are superstars who command a great opening. Their films open big with larger number of prints and during opening weekend (Fri to Sun) they ensure a large turn out irrespective of the quality or content of the film.

In fact, a superstar’s ratings are purely based on how much revenue the actor can generate and how fast he does it. In cricket, the team that scores maximum in the first 15 overs stands a better chance to win while in Tamil cinema, the hero who collects the best in the first 3 days is the real superstar!

Tamil cinema’s top 5 openers-

No1:- Rajnikanth
The best opener that Kollywood has ever seen! Even a bad film of his, takes a one-week opening instead of the regular three days! If the film carries good reports, then he gets repeat audience from day-one itself, something unheard of in Indian cinema. This superstar has pulling power in neigbouring states like Andhra, Kerala and Karnataka including overseas. The production cost (minus his salary) of his films is recovered in the opening weekend itself.

No: 2- Vijay
The 31-year old actor is the fastest rising star in Tamil cinema who is fast catching up with the real superstar. But unlike Rajnikanth, Vijay does not have a market in Andhra but in Kerala, Karnataka and overseas he is very popular especially among Sri Lankan Tamils. His weekend opening is the best among young heroes and afterwards the film will run purely on the strength of its content.

No: 3-Vikram
He has a never-say-die spirit and climbed up the ladder on his own hard work over years. A late bloomer, Vikram has opened up the Telugu market and created a new road map for Tamil films all over South. He appeals more to city audience and has a fantastic opening in cities. He also sells best when he combines with good directors like Shankar, Dharani and Bala.

No: 4- Kamal Hassan
The rise of Vikram has eaten into Kamal Hassan’s market of character-driven roles that click with the upper-class city audience. Still Kamal is way ahead in comedy genre which unfortunately does not go down with the masses as they are not crass and loud. Kamal films also take a good opening only in cities and his citadels are Kerala, Andhra, and overseas, which is now being threatened by the young brigade.

No:5- Surya
The year 2005 saw the rise of Surya as an action hero. He emerged as a winner with Mayaavi taking a good opening though the film flopped. Now his Ghajini took a fabulous opening similar to a superstar film. He is also fast emerging as the teen icon among youth of Kerala and overseas, which augers well for him.

This rating is purely based on the box-office success of the respective actors in the last 15 months. Please note that there are a host of other actors who too command good opening.

Indian American, America's Young Scientist of Year

Neela Thangada (left) and Nilesh Tripuraneni (right) claimed the top two spots, in a field of thousands of middle-school students across the United States, in the Discovery Channel Young Scientist Challenge finals held at the University of Maryland.

Neela, of San Antonio, Texas, was adjudged 'America's Top Young Scientist of the Year' -- which carries a $20,000 scholarship – for her science project on plant cloning. Nilesh, of Fresno, California, who came up with an environment-friendly approach to hydrogen production, won the second prize, which carries a $10,000 scholarship.

Both entered the contest as eighth graders and are now high school freshmen.

Continuing the Indian-American sweep, Anudeep Gosal of Orlando, Florida, won the special Military Channel Army/Navy Award, and shared the National Park Service Explorer Team Award with four other contestants.

An original field of 75,000 entrants was whittled down to 400 semi-finalists; which was later reduced to 40 finalists. This short list also included Narayan Swamy Subramanian of San Jose, California; Sabrina Lakshmi Prabakaran of Fort Myers, Florida; Shireen Dhir of Warner Robins, Georgia; Nilesh Kaushik Raval of Saginaw, Michigan; and Pinaki Bose of Fort Worth, Texas.

Neela Thangada, a student of Keystone Junior High School, won the top prize for her science fair project titled 'Effects of Various Nutrient Concentrations on the Cloning of the Eye of Solanum Tuberosum at Multiple Stages.' Her skills of leadership, teamwork, scientific problem solving, critical thinking, and oral and written communication skills earned her the title of 'America's Top Young Scientist of the Year', organisers say.

"I am very excited and happy to win this prize," Neela told rediff India Abroad. "I did not expect to win, so it was a shock to me." She said the contest is a great programme, which helps students get interested in science and take that interest to the next level. She plans to continue research at her high school, with the ultimate goal of becoming a professor of medicine.

Neela's research was inspired by a biology textbook's idea of a potato cloning experiment. She wanted to determine how different nutrient concentrations affected the multiple stages of growth in a potato. In her experiment, she removed 60 shoot tips from growing potatoes.

After sterilizing the tips, she excised the bottom two segments, and placed each in a test tube of half-strength or full-strength nutrient solution before incubating them. During her first trial, all samples became contaminated.

The daughter of Praveen Kumar Thangada and Mridula Rao, Neela persevered and redid the entire experiment, and found that the potato clones did indeed grow better in the full-strength solution.

Second-prize winner Nilesh Tripuraneni, of the Kastner Intermediate School, had heard about hydrogen-powered cars, but understood that producing hydrogen requires fossil fuels. He sought to find a more environment-friendly approach through solar hydrogen production.

His project was titled 'Solar Production of Hydrogen from Seawater via Electrolysis'. He built a solar-powered device that ran an electric current through a beaker full of saltwater. The result: electrolysis, by which water is split into hydrogen and oxygen.

By clever manipulation of various gas laws, he measured the temperature, pressure, and volume of the hydrogen gas produced. He found that seawater produced almost as much hydrogen as solutions containing sulfuric acid or sodium hydroxide.

The son of Indira and Bhaskara Rao, Nilesh is now a freshman at the Clovis West High School.

Anudeep Gosal's project was to design rockets that better resist the wind. He tested model rockets under four conditions: unmodified and launched vertically, unmodified and launched at various angles, modified with fins tilted at 7 degrees, and modified with 7 grams of weight added to the nose cone. He launched each group 10 times and measured the distance from launch point to touchdown. The unmodified rockets averaged 99 feet of drift, while the others drifted much less. Homemade measuring tools helped him keep track of the rockets.

In a year, his school rocket club has lost a total of 20 percent of the rockets launched due to wind. His design could save not only the money invested in the model rockets, but the time it takes to build them and to search for those lost by wind drift, according to the organisers.

"Discovery is incredibly proud of these 40 young explorers and leaders of tomorrow," said Judith A McHale, president and CEO, Discovery Communications. "Neela Thangada and the other finalists are blazing a path toward a bright scientific future, and setting an example for their peers.