Seminar on Growth Through Partnership - Doing Business with East Europe
December 11, 2002, New Delhi

Speech by Mr S N Menon, Additional Secretary, Department of Commerce, Ninistry of Commerce, Govt. of India

Shri Rajiv Pratap Rudy, Hon'ble Minister of State for Commerce and Industry, Government of India, His Excellency, Mr. Iacob Zelenco, State Secretary for the Romanian Authority for Privatisation & Administration of State Ownership, distinguished participants, Excellencies, Ladies and Gentlemen,

It is a privilege for me today to be addressing this gathering present here for the National Seminar on 'Increasing Business Opportunities with Eastern Europe', organised jointly by the Government of India and Federation of Indian Chambers of Commerce and Industry.

First of all, I would like to thank you all for taking out time from your busy schedules to attend the Seminar;

India has traditionally enjoyed a close and multi-faceted relations with most of the countries of Eastern Europe. However, the transition from centrally planned, socialist economies to market-oriented economies, collapse of old trading arrangements, lack of knowledge of each other's capabilities and emerging potential in the new scenario, fragmentation of retail markets, high interest rates which discourage long distance trading on Letter of Credit basis, an increasing demand for sophisticated packaging and quality goods, contributed to a decline in bilateral trade between 1989-90 to 2000-2001.

It has, therefore, been India's endeavor to nurture and re-strengthen bilateral relations with the East European countries, abbreviate the pains of the transition period and meet the challenges of their transition period in a pro-active and constructive manner.

New institutional arrangements to ensure smooth conduct of economic relations have been put in place.

In the early 1990s, the bilateral rupee trade and payments agreements with the East European countries were terminated and trade began to be conducted in convertible currency.

The legal and institutional framework for bilateral economic interaction was strengthened with launching of discussions on/conclusion of several economic agreements with each of these countries.

Air Services Agreement; Avoidance of Double Taxation Agreement; Bilateral Investment Protection Agreements have been concluded or are under discussion, with several East European countries;

The Joint Commissions/Committees have been resuscitated and a series of high-level business delegations exchanged.

New interactions and linkages at the apex industry association and commercial organisations' level have been established.

This initiative, accompanied by the beginning of a recent economic upturn in some of these countries has led to a fresh revival of economic contacts.

It has lately been noted that the share of East European countries in India's total exports has declined over a period of time.

It is, therefore, felt that for adequate expansion and economic cooperation, there is a need to create awareness among the Indian business community and address certain issues. This is even more significant, in view of the Conference of the Heads of Missions, held in Warsaw in February, 2002, focussing on ways and means to intensify our bilateral cooperation, particularly in the field of trade and economy with the Central and East European countries.

Hon'ble Minister of Commerce and Industry Shri Murasoli Maran, during his visit to Romania in June, 2002, had also expressed his views to focus on the Central and East European Region as potential business partners for India.

Many of the East European countries are in the process to complete accession negotiations with European Union and are steadily progressing towards EU membership as well as for integration with the global economy. In the first phase Hungry, Czech Republic, Poland, Slovenia & the Slovak Republic are among the first ten countries that are on fast track to join the E.U. For India, in case our business and industry takes timely steps to invest in East Europe, the benefit would consist in gaining a foothold into the European Union market through these countries. There are immense opportunities which should be taken advantage by the Indian industry. This opportunity will not be available later once the accession process is complete.

I hope that the deliberations in today's Seminar would provide further insights in improving both bilateral trade and investments between India and Eastern Europe.