Indo French Business Meet 2006
December 4, 2006, New Delhi

Address by Shri Kamal Nath, Hon'ble Minister for Commerce & Industry

I am indeed delighted to be part of this august gathering and to be able to share some of my thoughts on India-France business cooperation and relation. At the beginning, I would like to complement FICCI, UBIFRANCE and the French Embassy in India for having painstakingly put together this business-to-business meet involving the Indian and French businessmen. Valued presence of the Hon'ble French Minister for External Affairs, Ms Christine Lagarde, I believe, has put the right impetus and has shown the importance attached to this event. I am grateful to her for leading a high profile multi-sectoral delegation from the French Small & Medium Enterprises to India.

No doubt, in a globalised world, challenge & interdependence co-exist in a peculiar mix, giving rise to both competition and cooperation. However, in this situation of flux, the dynamics in the world economy have to be played by proactive stances by its leading partners. Countries have to identify strengths, theirs as well as of others, to forge partnerships that can spell a win-win scenario for all.

France, needless to say, is an extremely important player in world politics and economics. I am told it is the fifth largest economy in the world and is the leading agricultural economy in Europe. France has a highly diversified industry ranging from Automobiles, Construction & Telecommunications to Aerospace, Agro-business & Chemicals. The financial system of France is well developed with the Paris Stock Exchange being one of the leading exchanges in the world. Its Insurance Sector is the world's fourth largest. Paris is the most visited city for tourism and Eiffel Tower, Notre Dame, Chateau de Versailles, Louvre Museum and many more can leave its imprints on one's mind for a long time to come

We highly value our association with France. India and France go down a long way in history. In the last few decades, we have enjoyed cordial and substantive ties, with regular interaction between the top leadership of both the countries. Cultural ties are also very strong with regular exchange programmes and film, food and literary festivals The idea of engaging each other in a comprehensive and bi-lateral fashion is to build deep roots in our relations and not to constrict it to politics alone.

I hold the view that economics play a very dominant role in shaping relations between nations. India and France are no exception. Both the countries have lots to offer to the mutual benefit of both. The Bilateral Investment Protection Agreement between India and France, signed in 1997, and the Agreement on Avoidance of Double Taxation have already laid down the groundwork for strong business relations.

India is an emerging and ambitious economy. It is the world's largest democracy. It is among the world's top ten economies, aiming to go a few notches higher by continuing with its impressive 8% plus growth rate achieved at present. In fact, for the first half of this financial year GDP has grown by 9.1 % .This was the highest first half GDP growth since 1991-92.

Some factors lend resilience to its good economic prospects. It is in the past decade and a half that we undertook comprehensive structural reforms touching a wide range of economic sectors like banking & finance, insurance, infrastructure and telecom, all on the pretext of correcting a short-term Balance of Payment problem. Our long-term vision was to build our inherent economy strong by freeing the industry from the shackles of licensing and reservation. The Government progressively moved away from the task of producing goods that are non-essential and non-strategic.

We still continue to change our economic policy parameters for the better. And in a democratic policy, we have been able to take along in agreement all sections of the society on the broad parameters of change. We accord high priority to improving the infrastructure. We are committed to provide our business world class and efficient infrastructure, be it in power, roads, rail, port or telecommunication. Better infrastructure means that the cost to the business that uses them is effective and lower.

The National Highway Development Programme seeks to decongest our highways connecting the metropolitan cities and other State capitals by widening and improving them. Telecom services are easily available, better quality-wise and less expensive Our sector regulators ensure fair competition leading to fair prices to the benefit of the user. The basic thrust of all these are to increase availability as well as enhance quality and reduce costs by ensuring competition.

The regulatory system in the Banking & Financial Sectors has evolved over the years and is fully in place A case in point is the Asian Currency Crisis, which hit the South East Asian countries in the late Nineties, a phenomenon from which India was completely insulated. Our foreign exchange reserves are at present US$ 165 billion, exerting no pressure at all on the price of the Indian Rupee. We are able to keep inflation in check and at the same time, not allowed real interest rates to rise.

India has a young working population, with a median age of 24 years. The Indian workforce is known as much for his industriousness as for his intelligence And he is available for a price cheaper than what is outside. We are making all-out efforts to leapfrog into higher technology by focusing on technology upgradation and research & development. We have initiated schemes like the Technology Upgradation Fund in several sectors.

All these go on to show that we are serious in proving our economic and business credentials. India is an outward looking economy. It has opened up almost its entire manufacturing sector for participation by overseas Investors. India has come a long way in attracting investments from abroad. Inflow of Foreign Direct Investment, which was negligible in 1991, was US$ 7.5 billion last year. FII investment was US$ 12 billion last year.

The sectors that have attracted the most FDI in India are Electrical Equipments. Services Sector, Telecommunications, Transportation Industry, Fuels, Chemicals and Food Processing Industries. While investors to India are mostly from the USA, Mauritius, Japan and Netherlands, French companies have also made their presence in India mainly in sectors like Fuels, Chemicals, Cement, Glass and Food Processing Industry. Investors from France have brought US$ 1.76 billion during the last fifteen years in their business ventures in India. We look forward to more Investments from them.

The India-France trade figures of US$ 6.2 billion during 2005-06 is just 2.5% of India's total trade with the world and certainly belie the potential it possesses. India and France has the depth to trade more and in more sectors.

In the backdrop of the trade and investment relations between India and France, this event would be a step towards realizing the full potential of our economic partnership with France. I am told that the delegation from France consists of businessmen representing Small & Medium Enterprises in a wide array of sectors like manufacturing, information technology, pharmaceuticals, environment, aeronautics and life sciences. I am also told that a programme for Agribusiness and Food Processing Sector is lined up.

At this point I must mention that we are keen and committed to a deeper economic engagement with European Union. The 7th India-EU Summit which was held in October, 2006 in Helsinki has given positive direction to our relationship. At the Summit it has been agreed that both India and EU will initiate negotiations for concluding early a broad-based trade & Investment agreement.This is the opportunity that we must use for betterment of the lives of people on both sides.

In this connection, I would like to make a point that the food-processing sector is gearing up to be a sunrise industry in India. I can count several factors that are working in its favour: India produces 50 million tons of fruits, which is 9% of the total world fruits production and produces 90 million tons of vegetables, which is 11% of total world vegetable production. Fruits and vegetables are perishables and require further processing for increasing their shelf life. In India. only 6% of the perishable products are processed, which is low compared to international standards. Our vision is to increase this figure to 20% over the next ten years.

Demand for processed food would be stimulated by changing socio-economic situations like rapid urbanization, bias towards nuclear family and greater work participation among women. The Mid-day Meal Programme of the Government for school children is another sphere where the food processing industry can chip in for tie-ups. Street food offered by vendors is an area that can be targeted for systematic development by the food processing industry. We are serious about having a strategy in partnership with the industry to regulate the development of this sector. In our endeavour, we would be all too happy to seek the cooperation of the French business.

The sectors represented by the French delegation are sectors to which India attach a lot of importance. Environment is one sector where India would like to take advantage of France's expertise in implementing Clean Development Mechanism projects. India has ratified and is committed to the Kyoto Protocol of reducing its emission levels of green house gases by 52% of its 1990 level during the period 2008-12.

I sincerely hope that the French and the Indian delegation that are here to hunt for partners are able to find and make matches and cement strong relationships for the future. This Indo-French SME Business Summit is indeed laudable. I would earnestly desire that such initiatives be replicated with greater frequency. At the end, I want to assure the esteemed French delegation that doing business with India would be highly rewarding.

Thank you and I wish you all the very best for a successful completion of this event and for all your future endeavours.