Joint Session of Indo-Czech Joint Committee & Fourth India - Czech Joint Business Council
December 16, 2004, New Delhi

Address by Mr S N Menon, Secretary, Department of Commerce, Ministry of Commerce and Industry, GOI

[H.E. Dr.Miroslav Somol, Deputy Minister of Industry and Trade, is visiting India as the Co-Chairman to the Indo-Czech Joint Committee from the Czech side. He also Co-Chaired the last Joint Committee Meeting held at Prague.]

His Excellency Dr. Miroslav Somol, distinguished members of the Czech delegation, colleagues from the Indian delegation, representatives from business and industry in Czech Republic and friends.

It is my privilege to welcome Dr. Somol and his distinguished delegation comprising of officials from the Government of the Czech Republic and the representative of the Czech business to the inaugural session of the Inter-Governmental Joint Committee Meeting and the Joint Business Council. I wish you a very happy and fruitful stay in India.

Today's inaugural session of the Joint Committee and the Joint Business Council is a testimony and demonstration of our resolve to continue further the tradition of our close relations. This session is 6th in the series. Our interactions with the Czech side have been very frequent and regular. Every occasion like this in the past has given us an opportunity to re-explore possibilities of fresh co-operation.

Excellency, I congratulate the people of the Czech Republic on its accession to European Union. I am sure the entrepreneurs of the two countries will make use of the opportunities that have opened up with your membership of EU.

Indo-Czech economic relations have a long history. Not only have they been exceedingly cordial but also their strength is time tested. Our relations with the new, democratic Czech Republic continue to be warm and friendly.

I am happy that the Joint Committee is meeting to explore new dimensions in bilateral trade and investment adding further strength to the existing economic cooperation.

Excellency let me start by briefly reviewing the state of the Indian economy. Our economy has been rapidly integrating with the global economy over the past decade with a growing sense of self-confidence. Since we launched the reform programme, our economy has grown at an average rate of 6% per annum. In 2003-2004, the growth rate in GDP is at 8.2%. India's foreign exchange reserve crossed $131 billion. Inflation is in single digit and the macroeconomic situation remains positive and stable. We are one of the two fastest growing economies in the world.

India exported goods worth US$ 63 billion during 2003-2004, showing a growth rate of more than 20% over the previous year. The trend of growth continues in the current year, that is, 2004-05 (April-October) and exports are US$ 40 billion which is 23.73% higher than the level of US$ 33 billion for the same period of 2003-04. A strong economic growth has also boosted India's imports and non oil imports stood at US$ 38 billion (April-October) in 2004-05, which is 23.30% higher than such imports in the corresponding period last year.

India has a liberal policy framework for Foreign Direct Investment (FDI) and Foreign Technology Transfer. FDI upto 100% is permitted on the automatic route in a large number of sectors. There is no restriction on repatriation of original investment as well as returns on investment. Many new sectors have been opened to FDI such as integrated township (100%), insurance (26%), airports (100%), mass rapid transit systems (100%) etc.

We have launched ambitious programme to upgrade our infrastructure to meet the ever-increasing requirements of our growing economy. India is looking at investment upto Rs.150 crores in sectors such as power, transport including ports, airports, road, telecommunications etc. A liberal Foreign Direct Investment policy and the focus that the government has accorded to infrastructure sector opens up tremendous opportunities for the business in our two countries to collaborate and join in this area.

Excellency, in the Foreign Trade Policy September 2004 and March 2005, the Government of India introduced a new scheme to establish Free Trade and Warehousing Zones. The Scheme aims at creation of trade-related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency. Foreign Direct Investment would be permitted up to 100% in the development and establishment of the zones and their infrastructure facilities.

With increasing global integration, the Indian enterprises have started venturing into other countries for marketing, production, acquisition and even research and development. The policy on Indian investment overseas has been consistently liberalised and streamlined from time to time. The Indian companies can now freely invest up to US$ 100 million in a year without prior approval of the Government of India (provided the overseas investment is not real estate). Excellency, on the foundation of the inherent strength of the Indian companies and supported by the liberalised overseas investment policy, our enterprises are looking forward for available opportunities in your country.

Excellency, our Trade policy has also been greatly liberalised and most items have been placed on the open general licence system. Tariff levels have been brought down substantially and are gradually moving towards the ASEAN levels. India's trade policies are fully WTO compatible.

India's scientific, technological and industrial capabilities have matured tremendously since we achieved independence. Similarly India is today recognised as a world leader in the field of Information Technology.

Let me now turn to some of the features of our bilateral economic co-operation.

Czech Republic is an important trading partner of India. Bilateral trade between India and the Czech Republic has increased from US$ 142 million to US$ 198 million in 2003-04 over 2002-03, registering a growth of 40% during 2003-2004 over 2002-2003. India's export as well as import has increased by 37% and 121% respectively during 2003-04 as compared to the year before. During the period 2004-05 (April - August) the export to Czech Republic stood at US$ 30.95 million, showing a negative growth rate of 23% whereas imports stood at US$ 59.14 million showing a positive growth rate of 100.11%, as compared to similar period of previous year.

Our current level of trade does not reflect the potential of trade and economic relations that exists between the two countries. There is scope for further increase in trade in a variety of items. I feel that we have the capabilities to diversify our trade basket to include niche products. Sectors such as engineering, Information Technology, packaging, chemicals, pharmaceuticals, medical equipment, food processing industries, biotechnology, science & technology offer opportunities for flow of both trade and investment.

I am happy that Joint Business Council is meeting along-with the Joint Committee. This synergy between Business and Industry and the two Governments is a positive aspect of our relationship.

I would like the business community in both the countries to strengthen this process of consolidating the natural flow of trade and economic interaction between India and the Czech Republic. I look forward to increased interaction in trade and investment between our countries and assure that every possible assistance would be extended by the Government to facilitate greater exchanges with our business community.

I am confident that this meeting like earlier meetings will be able to identify specific sectors and measures for giving a further boost to our bilateral economic co-operation in diverse sectors.

Thank you.