Crisis can be an opportunity, too

India emerges a serious business partner for developed nations in the post-September 11 scenario

RAJEEV JAYASWAL & SANJAY SARDANA

Notwithstanding slowdown in the global economy and the US attack on Afghanistan, corporate India has been able to attract attention of developed nations. Delegates representing the developed world, particularly the US and European Union (EU), have acknowledged the strength of the Indian economy and shown eagerness to have a long term business relationship with India.

A marked change in the economic diplomacy has been seen in the post-September 11 phase, where emphasis of India’s business relations with the developed world has been no longer on confidence building measures but on concrete proposals and partnerships. The paradigm shift can be seen in the light of recent visits of foreign delegates especially from the US, the EU, Germany and Belgium, just after the September 11 crisis.

There has also been a turnaround in the Indian business policy immediately after the Afghanistan crisis, when India started looking at other markets beyond the US and Europe. Russia too, is attaching renewed importance to India.

Last week, the Indian capital was the centre of attraction for world business leaders as two major business events took place recently in New Delhi—India-EU Business Summit and US-India Business Council (USIBC) meet.

The role of apex industry associations, Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (Ficci), is laudable in putting India at the centrestage. Of course, the positive attitude and proactive role of government cannot be ignored either.

India’s intentions were communicated to the visiting USIBC delegation led by former US ambassador to India, Frank G Wisner, and the India-EU delegation led by the Belgian prime minister. The message was clear that India means business.

“It is a matter of give and take,” disinvestment minister Arun Shourie told emphatically while addressing the USIBC delegation at the CII meeting. He was referring to US concerns of high tariff regime in India. Mr Shourie was loud and clear that India’s concern is terrorism, which could not be isolated from country’s business interests.

Undoubtedly, September 11 has brought progressive countries together, and the political needs have also increased the chances of strengthening the business relations among themselves. India is certainly in the league of such nations. That is the reason why while addressing the USIBC delegates in Delhi, Mr Wisner said: “One day I would like to dream of a US-India bilateral trade agreement.”

In fact, US representatives explored the potential for industrial cooperation between the two countries in high value-added services like back office support, biotechnology, digital media and remote engineering as well as a host of professional services.

The thrust was on pushing movement of people, scientific, professional and academic exchange, joint ventures and other avenues of knowledge trade between India and the US. The concept of knowledge trade relates to exchange and transfer of knowledge across borders.

Concerns were raised by the US side at a Ficci-USIBC meeting regarding several areas where more work needs to be done in India. These include high licence fee, comparatively high import tariffs on equipment, restrictions on foreign ownership, tax rules and fee arrangements that discriminate between public and private entities, and uncertainties in the regulatory framework.

It was mentioned that these concerns need to be addressed to ensure the full international market response to India’s important innovations and to unleash India’s own homegrown engineering and entrepreneurial talent.

India is well positioned to take advantage of movement towards knowledge-based industries. Ensuring access to other markets by providing access to its own market will work as an effective and necessary tool if India is to exploit its competitive edge in global markets.

The US business too, has realised that now is the time for two countries to begin building a strong trading relationship by identifying and implementing steps towards pragmatic mutual market opening.

Ficci and USIBC released a report on the Indo-US Knowledge Trade Initiative (KTI), which was prepared after an intensive year-long preparation where inputs from more than 150 experts from both countries were taken. The inputs covered a wide array of issues, including e-commerce regulation and taxation, finance, human capital development, IPRs, personnel mobility, trade in services and the communications infrastructure.

According to a joint study conducted by EU and CII, India may attract at least $5 billion worth of investments from EU members in the next four years time. The seriousness to increase bilateral trade between India and EU is evident from the joint study commissioned by the two partners and identification of engineering, telecommunications and information technology (IT) as areas of potential growth.