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His
Excellency Vice-Premier Hui Liangyu,
Mr. Yu Ping,
Vice-Chairman of the China Council for the Promotion
of
International Trade,
Shri Kamal Nath, Minister for
Commerce & Industry
Business Representatives from China
and India
Ladies and Gentlemen.
I am delighted to have
this opportunity to meet you today.
The India-China
Economic Trade and Investment Summit is a unique gathering of
businesspersons representing the two most populous countries of
the world. You have grown competitive by starting from continent
- sized markets and graduating to world markets. You are the
symbols of the growth stories in India and China. We salute your
dynamism and entrepreneurship.
Your meeting today is an
expression of your confidence in the potential for economic
cooperation between India and China. It is equally a testimony to
the progress that business communities from both sides have made
in working with each other.
Ladies and Gentlemen,
India
and China are today the fastest growing large economies in the
world. We should remember that China, India and Europe had almost
equal shares of world income in the early 18th century. As the
21st century unfolds, both India and China stand poised to regain
their weight in the global economy.
Our two countries will
need to work together to ensure that we contribute to, even as we
benefit from, the economic resurgence and integration of Asia.
Our two economies are becoming engines of economic growth and
must use our natural and human resources, technology and capital
for the common benefit of the region.
The Indian economy
has witnessed growth rates of close to 9% per year in the last
three years. Our macro-economic fundamentals are strong. We have
undertaken a series of economic reform measures to facilitate
investment and growth. Our savings and investment rates have
increased to 35% of our GDP and are rising. With a predominantly
young population, there is potential for further increase in
these rates.
Although India is more integrated with the
global economy than ever before, the growth has been largely
fuelled by an expanding domestic market. All these factors give
us confidence that we will be able to step up our annual growth
rate to 10% within the next five years.
Our bilateral
trade with China has doubled in the last two years. Our trade
target of 20 billion US dollars by 2008 was reached two years
ahead of schedule. The revised target of 40 billion US dollars by
2010 is also likely to be achieved two years ahead of
schedule.
This makes me wonder whether our two Governments
have been underestimating the capabilities of our respective
industries and their strong urge to do business with each other.
We therefore propose to set more ambitious targets.
In the
area of trade, the challenge before us is to diversify our export
basket to China. I would urge Indian business to vigorously
pursue opportunities for expanding non-traditional items of
export. Such efforts, when matched by greater market access for
Indian goods in China, will help to bridge the rising trade
deficit between us.
In
addition to our competitive manufacturing industries, India has a
diversified agricultural production base. Our food processing
industry is also growing rapidly and we can supply quality
agricultural and marine products to the Chinese market. A
conducive environment should be created for this trade to
expand.
The services sector accounts for more than 50% of
India抯
GDP
and more than 40% of China抯
GDP.
India has had considerable success in positioning itself in
hi-tech services in world markets. There are enormous
opportunities for both India and China to expand trade in
services, particularly in construction and engineering,
education, entertainment, financial services, IT and IT enabled
services, transport, tourism, and health. We will work together
with the Chinese government to remove administrative barriers and
simplify regulatory regimes in order to move forward in these
areas.
Chinese companies have been actively engaged in the
Indian market. I understand that Chinese firms have contracted
projects in India worth over 12 billion US dollars. Indian majors
have set up a number of joint ventures or subsidiaries in China
in the pharmaceuticals and software sectors, among others.
We
must strengthen the base of our economic cooperation through
business alliances and collaboration in technology transfer and
development. We seek to promote bilateral investments in
traditional sectors such as petrochemicals, steel, healthcare, IT
and automobiles. Equally, our entrepreneurs should explore
opportunities in new areas such as biotechnology, advanced
materials, renewable energy and low carbon technologies.
I
would suggest a three-pronged strategy for the chambers of
industry and commerce of both countries to achieve these
objectives. Firstly, you should jointly develop a strategic plan
for the future so that you have a vision of our economic
cooperation and a road map for its implementation. This will
ensure that a long-term strategic perspective that looks ahead to
future challenges and opportunities guides our ties.
Secondly,
you could develop profitable business models that factor in our
complementarities and competitive strengths and the special needs
of large markets like ours. The opportunities are many and
innovation is the key to exploiting them.
Lastly but
equally importantly, you need to acquire insights into each
other抯
markets,
business customs and management styles. In the final analysis,
doing business is about developing understanding and trust in
your partners. Additionally, the business communities of our two
countries should develop a deeper understanding of the
macro-economic outlook, the regulatory regimes and of factors
that have a bearing on the competitiveness of enterprises.
I
am glad to know that the number of visitors exchanged between our
two countries approached the half million mark last year and
direct flight connections have risen to 22 a week. We need to
encourage this growing interaction, including through easier
grant of visas.
I would like to assure this gathering that
both governments will work together to put in place an enabling
environment for greater trade, investment and economic
interaction. This has to include creating a level playing field
by addressing such issues as non-tariff barriers, IPR protection
and market-related exchange rates.
Ladies and Gentlemen,
All
countries must compete in global markets and such competition is
not inconsistent with co-operation nor is it adversarial. The
industrialised countries constantly compete with each other and
they see this competition as constructive and mutually
beneficial.
Economic cooperation between us has become a
principal driver of our strategic and cooperative partnership for
peace and prosperity. Several bilateral understandings and
agreements are already in place to address different sectoral
aspects which impact on our economic cooperation. India and China
working together should develop a habit of mutually advantageous
cooperation.
In 2003, our two Governments had established
a Joint Study Group to examine the potential for economic
engagement. Pursuant to this, a Joint Task Force has finalized
its report on the feasibility of a India-China Regional Trading
Arrangement. During my visit, I look forward to discussing
further steps in this regard with the leadership of China.
In
conclusion, I would like to congratulate the dedicated and
hard-working people of China for the rapid economic progress that
they have made. I would also like to thank the China Council for
the Promotion of International Trade for organizing this event,
and making this partnership of the business communities of our
two countries possible.
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