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India
- Czech Republic Economic and Commercial Relations
Trade between India and Czech Republic switched over
to payment in freely convertible currencies w.e.f. 1.1.1993.
For almost a decade, trade volumes were limited, reflecting
the impact of economic transformation in the Czech Republic,
reorientation of trade priorities, dissolution of state
trading companies, down-sizing / liquidation of heavy
industry and withdrawal of supporting mechanisms like
RPA and trade plans. From the Indian end too, liberalisation
and economic reforms widened our options beyond traditional
Czech suppliers. Combined with difficulties faced by
Czech companies in arranging finance, it led to the
virtual elimination of Czech presence from Indian projects
that were the mainstay of the economic relationship.
As a consequence, trade plunged from $ 406.67 million
in 1989 to a low of $66.7 million in 1991 and remained
at $130.20 million as late as 1999.
Revival of Trade - Our strategy for reviving bilateral
trade and economic cooperation takes into account significant
changes in both economies over the last decade. Its
main elements include:
- Encouraging investments and joint ventures including
with third countries as a cooperation mechanism (Skoda
Auto/ Volkswagen, Tatra/Terex).
- Focus on areas of strength like software (Progeon)
- In the Czech Republic, taking advantage of privatisation
opportunities for investment/ joint venture (Tatra/Vectra,
Nova Hut/LNM Holdings). A CII investment mission visited
Czech Republic in September 2002.
- Encourage and support Czech participation in Indian
projects (thermal power, railways). Restore PSU contacts
(IOF, HMT, BHEL) including technology relationships.
- Address specific problems inhibiting Indian exports
such as small volume requirements, short time frame,
cost of finance, etc. through warehousing and regional
approach.
- Expand into new areas like pharmaceuticals, engineering
goods, agro-products, auto components to Czech Republic;
and, automobiles, glass, water treatment and, optical
fibre technologies to India.
- Provide particular support to SME trading and manufacturing
efforts.
- Revive the tradition of high profile fair participation.
Czech presence at IETF 2003 and Indian at Styl-Kabo
2003 were exceptionally strong.
The combination of these developments have boosted
bilateral trade to $ 258.82 million in 2002 and $ 240.90
million in December 2003. To sustain this trend, it
is important to keep in mind the rapid differentiation
that has emerged in the CEE region. Czech Republic,
with a per capita income closer to European Union than
others, will be increasingly demanding in quality without
necessarily offering cost comfort. As a major FDI destination,
it will also be a base from which MNCs will reach out
to markets like India, particularly in areas like heavy
electricals, machine tools and metallurgy where Czechs
have traditionally enjoyed a high reputation.
The Czech trade promotion agency-Czech Trade, a government
agency of the Ministry of Industry and Trade has been
encouraged to open a Trade Office in Mumbai. The Office
will promote and support bilateral trade and co-operation
between both countries.
Source: Indian High Commission, Czech Republic
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