E.U. feels India needs to do more to attract investments
by Batuk Gathani - Hindu Times, October 13th 2002
BRUSSELS Minus the rhetoric on both sides of the Indo-European front, Indian observers are both perplexed and embarrassed by the almost casual and negligible attention the Third India-Europe Summit in Copenhagen has attracted in the European media. The European Union (E.U.) is often fascinated with the trade and investment prospects in China which has almost six times trade with the E.U. compared to India. From the Indian viewpoint, although the E.U. may soon account for almost a third of Indian export and import trade, from the E.U's perspective India accounts for less than three quarter per cent of its trade volume.
Indian exports may cross the psychologically sensitive billion-dollar mark, if the E.U. liberalises its import policy on Indian milk products, fruits and vegetables.
European business and industry leaders have yet to be impressed by India's economic reform programme launched in January 1991. They feel that the progress is slow, if not cumbersome, and, hence, investment and trade flows are modest.
Indian officials have argued that the reform process aims to reduce the extent of government controls over various aspects of the economy. But the ground reality for European investors is not impressive. They are fascinated by prospects in the ASEAN, the China Economic Area (China, Taiwan and Hong Kong) and Japan.
At the same time, Europeans agree with the United States Department of Commerce estimate that about three-fourths of the growth in world trade over the next two decades or by end of 2020 is likely to take place in Asia's four big emerging markets - the China Economic Area, India, South Korea and Indonesia.
The silver lining is that joint ventures between Indian and European firms have a good potential. To start with, there is the commonality of English language and the Indian legal system is based on the Western concept of the rule of law.
This is highlighted by adoption of the Western accountancy system and procedures. It is often argued that European capital and technology can serve as an ideal complement to India's natural and human resources.
West Europeans are suitably impressed by India's recent strides in information technology, often highlighted by the impressive export performance. India has the advantage of skilled, low-cost and efficient manpower, qualified engineers and managers.
Also, India is a fast growing and prosperous consumer sector of 250 million - an attractive consumer market by any criterion.
As Dr. Charles Tannock, Member of the European Parliament, told the European Parliament: "India is clearly amongst several potential great powers that are in midst of internal transition and with economic liberalisation India offers a growing market for European Union businesses. "A multicultural secular democracy in an otherwise troubled region, it is a source of stability with no-first-use nuclear policy. India is bulwark against the rise of extremism, in particular, regional Islamist tendencies, such as those evidenced by recent attacks on Christian and Western targets in Pakistan..."