The economic push has been brought about by the enterprise of the small Italians. SMEs, buoyed by technological superiority, not only dominate the economic landscape there but have been seriously contemplating making India their base for the long-awaited Asian push. The signals emanating from the second generation of economic reforms being ushered in by the BJP government are just right, titillating Italian expectations. "India is back in fashion in Italy," Benedetto Amari, ambassador of Italy to New Delhi, told The Financial Express. The following are excerpts from the interview:

What initiatives have India and Italy taken to deepen and broaden the level of economic cooperation? Are you satisfied with these initiatives? In your opinion, what more is required to raise the level of economic cooperation between the two countries?
The strengthening of the political and economic dialogue is at the centre of our efforts to the relaunch the whole gamut of bilateral relations. Italy looks at India as a huge market and very friendly country. Italian industrialists are more than eager to enter India. We are creating the necessary political scenario to allow bilateral ties to grow. For us, the BJP was an unknown entity. We had a perception of Nehru and Indira's country. We appreciate what is being done in the second generation of reforms and getting the right signals. External affairs minister Jaswant Singh visited Italy in the second week of January. In March, we are expecting the visit of the Italian minister of state for foreign affairs.
The Italian minister for foreign trade is also due to visit India this year to co-chair the 14th meeting of the Indo-Italian Joint Commission on Economic Cooperation. The Italian trade commission and the Indo-Italian Chambers of Commerce were quite active in 1999. We are planning to further step up our commitment to the Indian market and are finalising a soft loan for Indian SMEs for an initial amount of about $5 million, which could be further increased if the utilisation of the initial amount is satisfactory.
This line of credit is intended to support the internationalisation of the Indian SMEs, who play a key role in industrial production and exports, just as Italian SMEs. In the first 10 months of 1999, Italy became India's fifth foreign investor and continues to be the 15th trading partner. I am satisfied with the results but we must do even better by marketing the Indo-Italian partnership through information and promotion.

What are Italy's objectives for the Indian market as well as the short, medium and long-term strategies?
Italy believes that it is necessary to strengthen economic inter-dependence with India in trade and investments because there is a complementarity in the economies; the strong presence of SMEs in both can create a useful synergy in the scenario of globalisation.
We consider infrastructure, food processing, information technology, automobile and insurance as the most promising sectors. On the trading front, Italy after having exported mainly industrial machinery, now intends to launch in the Indian market the whole range of its "Made in Italy" products: fashion, furniture, white goods, leisure-time activities and foods. India is an important market that cannot be forgotten by any major company in Italy. The future belongs to India. It will be a key player in the economic field, not merely military.

How do you assess the Indian investment climate? Can you identify the negative and positive factors that in your perception will discourage or encourage Italian companies from choosing India as an investment and trading destination?
The investment climate is marked by the investors' renewed trust in the liberalisation signals coming from the Indian government. India is back in fashion in Italy and there is ample proof of that: Italian investments approved in the first 10 months of 1999 reached the $400 million mark, compared to $66 million for 1998, a growth of 60 per cent. This result is based on the structural competitive advantages of the market such as availability of qualified low-cost manpower and growth in internal demand.
However, the fact that investments dramatically increase with the stepping up reforms is not a coincidence. It clearly conveys a political message to the Indian government-"It is a must to pursue and consolidate the liberalisation trend without any half-heartedness and to provide continuity and coherence to the reforms process". It should also remove difficulties that have characterised the market in terms of both investment and trade. For instance, high import taxes and infrastructure bottlenecks.

How do you regard India as an investment destination compared to it's Asian competitors for foreign investment? In this regard, what more can Italy offer India? Or, what can India offer to Italian companies?
The tigers and dragons of the East have liberalised more compared to India. This atypical character of India, economic peculiarity, has very precise consequences: foreign companies in India often make medium to long-term investments but at a relatively lower level. In short, one has to be in for higher stakes but then, at least potentially, one can reap higher rewards. It does not mean that this atypical character of India should remain unchanged. It only means that a more solid basis must be created for present opportunities to become actual realities.
What more can Italy offer? A good share of Italian investments can increasingly come from small and medium companies but technologically intensive industrial belt which seeks alliance with similarly placed Indian partners. The latter have, therefore, the opportunity of sharing in the advanced technology, production modalities (clusters) and design tradition of the Italian product. The Indian industry can gain access, through this partnership, to those values that have brought to success "Made in Italy" in the world market.

If you are requested to spell out India's agenda for attracting foreign investment, what would be your suggestions?
Much depends on the Indian government's capability to ensure coherence and continuity to the reforms process. There is much expectation in Italy. One must avoid a situation where the mountain delivers a mole-hill.

When you think of India, what is it that worries you-socially, politically and economically?
I trust in the wisdom of India, the eternal India, the place of our common origin. The main need and worry I perceive concerns the improvement of education. Gradual but constant progress in this field will in due course defeat the two forces that are potentially most destabilising, poverty and illiteracy. Another factor that worries me is the growing militarisation of the sub-continent and the signs of continuing restlessness that come up among its nations.

Are there any differences or disagreements between the two countries that could hold back enhancement of the level of economic cooperation?
None whatsoever, and this is a strong winning card. There is no past to be overcome, no wounds to be healed, no fences to be mended. Italy and India are countries that share many similarities and both have great potential. It is up to the two countries to recognise them and use them to advantage. Indians are pretty similar to Italians, very emotional. You smile and conquer them. I think the Indians are the Italians of Asia. Even so, to remove the wrong perception about the government, BJP leaders should travel more and explain their problems worldwide. The attack on Chrisitians, for instance.

Do you think the wrong perception of India as a poor, underdeveloped country is largely due to the development assistance doled out by the rich nations?
Italy was a poor country till a few years ago. We had lost the war. There were serious problems in terms of food, shelter that had to be addressed. We asked for the assistance of the global community and welcomed it. India has serious problems, illiteracy and poverty. Its per capita income is certainly not amongst the highest. If India benefits from international aid, especially Italy which does not have a patronising attitude, there is nothing to be ashamed of. It is in the interests of India as well as Italy. Our image benefits a lot. And, India's aim of global power is also not a contradiction.

How can Italy help Indian products gain an entry into the European market, especially in the wake of strong anti-dumping action by the European Union? There is a strong feeling in India that the anti-dumping action is unjustified and unwarranted non-tariff barriers are being imposed against Indian products. What is your opinion?
There is no question of the EU targeting India on the anti-dumping issue. The Commission is obliged to open a case when Community industry provides sufficient prima facie evidence of subsidies and injury resulting therefrom. In fact, in the last three years, a growing number of anti-dumping investigations have also been initiated by India against EU. In any case, the anti-dumping issue must not be seen necessarily as a sign of conflicts.
It is also the sign of a growing economic interdependence. From 1991 till date, trade between India and EU has doubled, reaching $10 billion. It is normal that once in a while problems may crop up. The real challenge faced by India and Italy, not Italy as such, but Italy as a founder member of EU, is about how to manage this interdependence.