Welcome Address by Mr Vikram Kapur, Joint Secretary, DIPP

H.E.Vice Minister of Economic Affairs, Taiwan, Mr. Lin, Mr. Chien, Mr. Kalra, Ladies and Gentlemen.

It is indeed a privilege to be present here today. I had the opportunity of visiting Taiwan 10 days back. This gave an opportunity of personally witnessing the tremendous growth that had taken place. Taiwan is not only the leading producer of computer hardware, but also has the third highest foreign exchange reserves in the world.

India is by now recongnised all over the world as an IT power. What is possibly not so well known is that India is equally competitive in manufacturing sector. It is the chosen manufacturing base for all major automobile manufacturers in the world. Hyundai has started shifting its global production of Santro to its Chennai plant. Indica, a car designed and developed in India is now being exported to Europe under the name City Rover. World's top automobile manufacturers are sourcing components from India.

India has a huge market with 300 million middle class having growing incomes and increased preferences with over half its population below 25 years of age, the demand of this young nation would continue to grow for a very long time. Many foreign companies have been able to establish strong presence in the Indian market in a very short time and are now market leaders. I can quote example of LG and Samsung who have markets of US$ 1 billion in less than 6 years of their entry into India.

India is a democratic nation with strong and independent judicial system, free press and where entrepreneurship is flourishing. The economy has grown at over 5% annually during the last decade, a performance at which most countries would be proud of. The economy is expected to grow at over 7% this year. Foreign exchange reserves are expected to cross US$ 100 billion in the near future. A well developed banking system of over 63000 branches. The National Stock Exchange is the third largest in terms of number of trades while Mumbai Stock Exchange is fifth.

Since the beginning of economic reforms, the investment policies have undergone progressive liberalisation. The requirement of industrial licensing now limited to just 6 sectors on environmental, public health & safety considerations. From a modest beginning of permitting foreign direct investment in 35 sectors, today FDI is freely allowed in most sectors of economy with very few limitations. Along with the investment policies, trade policies have been liberalised and most items are under open general licence. The tax regime has stabilised with only three rates of indirect tax. Comprehensive amendments to the Companies Act are on the anvil. Foreign exchange controls have been lifted and profits and dividends are freely updated. Dividends can be paid by the wholly owned subsidiaries to their parent companies. The capital investment can be easily repatriated and stocks can be sold on the stock exchange without the requirement of prior approval.

Deficiencies in infrastructure were often cited as reasons behind India loosing on its competitiveness. This was not without substance. The Government has undertaken major programmes to improve the physical infrastructure. Under the National Highways Development Project, construction of 1400 k.m. of Highways at an investment of US$ 12 billion is under way. We are now adding 11k.m. of Highways everyday. The Government has recently announced a $ 22 billion programme to upgrade the port and shipping sector.

Upgrading of the airport at Delhi and Mumbai is being undertaken at estimated investments of US $ 1 billion each. A new Electricity Act has been brought into effect to promote development of power sector and allow trading in electricity.

India is a global leader in the field of Information Technology. We have 5,50,000 IT professionals and 100,000 are being added every year. The IT sector has exports of US $ 10 billion, which is expected to reach US $ 50 billion in 5 years. Over 250 of the FORTUNE 500 companies are clients of Indian IT companies. Out of the around 100 SEICMM Level 5 companies around the world, over two-thirds are Indian. The Indian IT companies have acquired good domain knowledge, process know-how and are competent in finding business solutions. Intel, CISCO, Microsoft, Dell, you name any IT Major and it is present in India. Studies have shown that by outsourcing, the country stands to gain by 45-55% whereas the vendor advantage is 30-40%. Creating a win-win situation.

At the end of the day, the business looks for returns on investment. India offers among the highest returns on investment. According to the study undertaken by U.S. Department of Commerce, the U.S investment in India had profitability of 19.33% in 2000 against 14.25% in China in 1999 and 13.36% in Thailand.

It is, therefore, only logical that India has been rated among the most attractive investment destinations. AT Kearney Business Confidence Index 2003 ranks India as 6th most attractive investment destination. AT Kearney has also ranked India as the most attractive destination for business process outsourcing. India ranks at second position in the availability of scientists and engineers and 9th in terms of quality of its Management Schools. It was the third largest recipient of Venture Capital in Asia.

India offers opportunities for investment in infrastructure, food processing, chemicals, petrochemicals, IT and knowledge based industries and for its large market. Over 250 of the Fortune 500 companies are operative in India. If all this is not attractive enough, India is also among the top 10 tourist destinations in the world.

I would like to thank FICCI for this opportunity.