INDIA & FINLAND: PARTNERS IN PROGRESS

BILATERAL RELATIONS:

Today, India and Finland share close friendship and strong complementarities in many sectors of economy. Our mutual requirements and capabilities can help us achieve a greater momentum in bilateral cooperation.

India has hitherto been a demanding market for Finnish companies and Finnish companies are participating in the rapidly growing Indian economy. Companies like Nokia and Kone are already well established into Indian markets. Even Indian Companies, especially Indian Information Technology concerns are establishing their presence in Finland.

• Trade:

Both India and Finland enjoy a dynamic commercial relationship with exports and imports showing significant annual gains. There is a growing enthusiasm on both sides. While India's exports to Finland have grown by 31% in 2004-05, the imports from Finland increased by 43% as per following details

Source: DGFT

Major items of Exports to Finland (2005):

Source: Indian Embassy

Major items of Imports from Finland (2005):

Source: Indian Embassy

Following points are noteworthy:

1) Imports from Finland are more and more dominated by high-tech products.

2) However, the Indian Exports to Finland have largely consisted of low-tech products, such as textiles, textile products, leather etc.

Impressively, the trend is changing now and the exports of more highly developed technological products such as electro-technical machines, appliances, chemicals etc has grown rapidly in recent years.

Balance of Trade:

Still, there is an imbalance of trade in Finland's favour. In order to correct this , Finland may be requested to increase their imports from India.

Indian items which have potential for Finish market and which can be sourced from India include : Granite, marble and tiles, fresh fruits and vegetables, processed vegetables and fruit juices, floriculture, marine products, hand/machine tools, electronics, spices, tobacco,, drugs, jewelry etc.

• Investments:

As a venue for production, India has fascinated Finns for a long time.

Statistics from Department of Industrial Policy and Promotion indicate that the cumulative FDI Inflow from Finland was US $ 47.07 during August 1991-March 2007 .

Today over 30 Finnish companies are established and actively operating in India. Nokia is already well known here. Wartsila, Kone Elevators, Storaenso and Fiskars, Thermo Projects, etc. have grown rapidly and are well recognised. Other active players include Metso, Outokumpu, KCI, Kone cranes, Vaisala and many others.

Prominent Indo- Finnish Joint Ventures:

Wartsila Diesel India Ltd.,
Kone Elevators India Ltd.,
Charminar Non-wovens Ltd.,
First Stonex Ltd.,
Vam Organics Ltd.,
Sterlite Communication Ltd.,
Nokia Telecommunications,
Repola (forests & metals),
Amer Group (automotive trade),
Kemira (chemicals),
Ahlstrom (machinery for pulp and paper),
UPM Kymmenes and
Imatran Voima (power).

Sectors attracting Finnish Investments in India are:

• Fuel (Power and Oil Refinery)
  
• Telecommuniations (Radiopaging, Cellular/ Mobile telephone services)
  
• Electrical Equipments
  
• Services Sector (financial and non financial services)

From reliable sources, it is known that :

1) The number of Finnish Companies in India, more than doubled in 2000s. In 2001, There were 30 such Finnish firms established and in early 2005, total of 70 Finnish companies were present in India either through their subsidiary of JV with a local company.

2) Further, about 100 Finnish firms export their products to India or operate on the market through local representatives.

PROMISING SECTORS OF INDO- FINNISH COOPERATION ARE:

In this era of globalisation when the world is growing smaller, countries of different political and economic policies are coming closer and are developing better mutual understanding. Both India and Finland are a part of this globalisation process and are capitalising on each others' areas of competitive advantage.

There exists a lot of potential for cooperation between India and Finland in wide range of sectors . The collaboration, however, has to be based on strategies that help both sides overcome current handicaps whilst leveraging existing strengths. While for India, collaborating with Finnish entities would bring access to a highly advanced technology; for Finnish entities, collaboration with India provides huge opportunities not only in terms of cost reduction but also in terms of opening up of prospects for jointly developing products and technologies for a potentially huge market as also for exports.

Given the strengths of the two countries and the obvious complementarities, the sectors of Indo Finnish cooperation that clearly stand out are:

• Environmental Technology
  
• Biosciences and Pharma
  
• Infrastructure
  
• Telecom/IT

1. Environmental Technology

Environmental deterioration is one of the gravest problems in India, one that can hardly be solved with the resources and expertise of India alone. The Indian Ministry of Environment and Forests is investing heavily in environmental protection strategies, prevention of pollution and support for clean technologies.

Intensive urbanization and the desire to satisfy international environmental norms create opportunities for Finnish firms in fields such as the reduction of industrial emissions and the development of community water supply and sanitation. Lack of clean water, groundwater pollution and the incorporation and privatization of water supply are great challenges for India. The utilization of bio-energy has begun and significant growth is expected in this sector.

Finland has suitable expertise in this area in water purification, waste-water treatment, waste management, recycling and utilization of renewable energy sources, among others. Finland also has a so-called TTT (science, economy and technology) cooperation programme with India, which includes co-operation among environmental authorities as a subgroup.

One of the environmental companies participating is Jaakko Poyry Group, which is already established in the India market, and the Finnish PPM-Systems Ltd., which has supplied emission measurement equipment there. Also Scan-Water, a company owned by Norwegians and based in Tampere, Finland, that manufactures water filters, considers India a promising market.

2. Biosciences and Pharma

India is an interesting export market for health care products. Many Finnish companies have already succeeded in making promising sales there. Hospital equipment and supplies in particular have potential. India is also an interesting market for pharmaceutical companies. Promising Finnish export articles include vaccines and medicines for malaria and dengue fever.

India also has biotechnological research and industry as well as pharmaceutical industry of its own. For instance, India has several successful manufacturers of generic drugs. Indian pharmaceutical industry has the third largest volume in the world, but because of the low price of the drugs, their share of the world market in euros is smaller. The sector is very heterogeneous in India, with up to 10,000 production plants.

If the industrialization of Indian agriculture develops, Finnish chemical industry may find some demand for its products. Kemira is already in India, but the country is a small market for it.

3. Construction Industry and Infrastructure Improvement

India has now opened its construction sector and infrastructure projects to foreign investors. There are plans for large-scale national project for the building and improvement of motorways, airports and urban centers. Because of the boom in housing construction, the demand for interior decoration goods is also growing.

Tamglass, a company from Tampere that sells security glass technology and equipment for manufacturing security glass, has received several orders from India's rapidly growing construction market and automobile industry.

4. Telecom & IT:

India is already presented strongly with some of the leading global companies in need of excellence in software production. On the other hand Finnish companies have achieved global recognition in the area of telecomunications and mobile technologies. Finnish consulting and software expertise, especially in wireless mobile communications is a good example of new innovative exports to India

IMPORTANT AGREEMENTS BETWEEN INDIA AND FINLAND AT POLITICAL LEVEL:

INITIATIVES TAKEN BY FICCI TO ENHANCE
INDO FINNISH BUSINESS LINKAGES:

FICCI had initiated bilateral cooperation with Finland, with the establishment of the Joint Business Council in 1983. The relationship was later redefined and more focus was laid on cooperation in identified sectors which were considered important for both the countries.

FICCI has hosted interactive meetings from time to time in honour of visiting dignitaries from Finland. We had hosted H E Mr Ole Norrback, Minister for Foreign Trade of Finland in 1997. In 2001 we had organised an Interactive Session with Finpro on "Technologies for Better Environment Prospects for Indo-Finnish Cooperation" during the visit of Her Excellency Ms Satu Hassi, Hon'ble Minister for Environment and Development Aid of Finland.

FICCI has entered into institutional arrangements with (I) FINNFUND, Finnish Fund for Industrial Cooperation Limited and (ii) Central Chamber of Commerce of Finland (KKK). These agreements were signed during the Third India-EU Summit in Copenhagen last month. These tie-ups should encourage bilateral trade and investment cooperation.

FICCI has played a pivotal role in strengthening India's commercial relations with EU and its member States including Finland. We have made continuous efforts to facilitate interaction between both the bureaucrats and businesses of the two regions. The India-EU Business Summits have played an important role in this area.