Set up base at Luxembourg and spread wings to EU: Frieden

Updated: Jan 24 2007, 05:30am hrs
With the visit of Luc Frieden, minister for the treasury, Luxembourg, bilateral ties are expected to get a push. India and Luxembourg share a special relation especially after the LN-Mittal Arcelor deal. Frieden was first elected member of Parliament for the Christian Social Party in the central constituency in the parliamentary elections of June 12, 1994. He also chaired the Finance and Budget Committee, as well as the Committee on Constitutional Affairs. Frieden, in an email interview to The Financial Express, said his visit will open lots of opportunities for both.

In Luxembourg, banks are allowed to operate as universal banks. Which Indian banks are present in Luxembourg, and any bank planning to enter the country

We are keen on having Indian banks open in Luxembourg. We are totally open to foreign banks entering our country. Though there are already 150 foreign banks in Luxembourg, one of the leading financial centres of the world, none from India has yet decided to open a branch. We want to inform them that establishing presence in Luxembourg would give them an easy access to the entire piece of our single market (EU passport), allow them to tap our expertise on mutual funds and gain from the proximity to the European Investment Bank, one of the biggest infrastructure lenders in the world which is headquartered in Luxembourg.

Is any Luxembourg-based bank or FI looking to enter the Indian market

Yes, a number of them are travelling with me to India to explore possibilities and assess the market. FIIs from Luxembourg are 7% of the total number of Indian FIIs registered with Securities and Exchange Board of India (Sebi), and their market share in portfolio investments is 15%, amounting to $ 6 billion.

Indian companies tap funds globally through Luxembourg, which they prefer to all other stock exchanges. Finally, our clearing and settlement institution, called Clearstream has a privileged relation with authorities, as its one of the only non central bank clearing houses which has been recognised as a custodian by India.

Which, according to you, would be the main focus areas for providing a fillip to the bilateral relation

We should be more active. Since we opened our embassy in 2002, weve had three trade missions to India, one in every 18 months. This month we shall have our first financial mission too, which was long overdue. Since LN Mittal invested in Luxembourg last year and opened our eyes to possibilities of the Indian market, we decided to do even more. Our companies and financial operators need to visit India more frequently, once or twice a year at least, with or without the minister in charge. We also need to have a double-tax treaty. Conversely, India should have more trade missions to Luxembourg.

You are looking at cross-border pension vehicles. Indias pension sector is on the verge of being opened up. Do Luxembourg-based companies have any plans to tap the sector

We were the first in Europe to develop legislation to have the EUs wide pension funds to tap the market of expatriates. These funds will certainly look at India too and other Asian markets. This is good for India and for European firms.

What kind to capital market regulation do you have What is your opinion about the Indian capital market Are you looking at it seriously

We have a very stringent supervision, though we are open to innovations and new products. Being a small country, bureaucracy is minimal. Civil servants are responsive. We dont allow them to sit on files. Capital markets are fairly developed in Luxembourg. In India, capital markets are yet to gain full width and breadth. To finance your needs for infrastructure and private investment, the debt markets need to mature. We look forward to reforms which would make this possible. We are keen to first listen to your needs, and to play a role based on our expertise.