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Member of the European Commission responsible for Enterprise and the Information Society

"EU-India information society challenges ahead"

EU-India CEO Forum

Brussels, 28 June 2001

New developments in EU-India relations since Lisbon and EU-India summit

EU India relations

Since the EC-India Joint Commission that took place in New Delhi on 6 February, where the Trade and Investment Initiative was launched, business on both sides have assumed responsibility for this important cooperation process. Industry leaders are now here to follow up on the Business Summit of Lisbon and to prepare for the Business Summit in the margins of the New Delhi Summit.

This is an expression of the shared will of those present:

  • to realistically assess the opportunities a reforming India offers to the global economy;

  • to examine India's capacities for opportunities in the EU market;

However, I would like to stress that trade and investment flows between our regions remain far below their potential; and to address a clear message to business on both sides that we badly need their efforts, and their lasting commitment, to help India release the opportunities that its large market can offer.

Ten years ago India launched itself on the path of a more shared prosperity, and of a more influential position in the world. We must not lose this momentum. Since 1999, the so-called "second generation" of reforms got underway, gradually liberalising India's economy and opening up important sectors to investors. "Global" FDI, however, is only very cautiously on the rise since then. A host of complex factors accounts for this not so satisfactory trend. European companies are not an exception in this context.

A collective effort is needed to gradually increase investors' confidence. We must build this new confidence on the reality that the country's "liberal" direction is now irreversible, and that Europeans have a key role to play in this major emerging market of the new millennium.

Trade and investment initiative

A clear manifestation of our determination to do our share to help India "take off" economically is the bilateral co-operation launched with the aim of enhancing trade and FDI through our "Joint Initiative for enhancing Trade and Investment".

This initiative is something concrete and an asset in the economic dialogue between India and the EU. And it can bring, as a collateral benefit, a further push to economic reforms in India.

We hope European business will see it as an opportunity to work with their Indian counterparts, and to develop a realistic and frank analysis of trade and investment prospects, as well as a coherent set of recommendations, combined with a clear comprehension of what is ultimately feasible politically - and what is not.

The sectors selected as a start in the "initiative" for the joint studies (Food Processing, Engineering/Automotive, Technology and Telecommunications) are of paramount importance in our bilateral economic relations.

Your joint analysis and recommendations will be presented to the highest bilateral political forum, the EU/India Summit of 23 November 2001 .

Telecom and IT issues

In the field of telecom and IT government officials have been meeting to build up relationships, on the basis of a recognition at the highest levels of the benefits of cooperation in this area.

During the EU/India Lisbon Summit it was agreed that an EU/India Working Group on Information Society would be set up for promoting bilateral cooperation in all areas of ICTs, and indeed this group met in January.

In this context, officials have made a start on developing a "Joint Vision on IT", with a view to stimulating cooperation on both sides. It is intended to be a reflection of an interactive process that must involve industry. We expect that our Member States will approve the text of such a statement in time for its adoption at the next EU/India Summit in November in Delhi.

A case in point for stimulating cooperation could be the IST (Information Society Technology) programme, which is open to non-EU countries. Two proposals involving Indian organisations were in fact received for the programme, although none were selected this time. It is worth mentioning that the Brazilian government, in order to stimulate participation of its companies, put in place a funding mechanism to finance successful participants to the IST Programme.

The Community's AsiaIT&C programme is also important in this context: Indian Industry is already participating to this external affairs programme. Thirteen proposals involving Indian organisations were received and nine of them are funded.

As both the EU and India have set out ambitious plans for the growth of IT - and its use as an enabling tool for raising human productivity and prosperity - there is a strong need to network organisations and businesses on both sides to draw the maximum advantage, and I would appeal to European industry representatives here today to build on the opportunity afforded by increasing government-level cooperation.

In summary, the political process has started but a lot remains to be done, both on the private sector side, and with regard to rendering the climate for foreign investment more attractive in India (notably through the regulatory environment for ICTs).

Trade issues

In addition to the Trade and Investment Initiative the Commission acknowledges and welcomes the activities seen to date. In particular:

  • The strong interest and support of CII and FICCI, both of whose representatives travelled to Brussels to meet up with their European counterparts last March and April.

  • The initiative by "Asia Invest" which has mobilised a team of three European and two Indian experts to help the European industrial associations to work hand-in-hand with CII and FICCI.

At the same time India could send an important signal that it is ready to mainstream with the global economy, improve its competitiveness, and give its companies a chance to compete globally.

But getting the type of improvements India is seeking, particularly in market access, outside a multilateral negotiation package, will be a slow process with low returns. It would also carry high risks, including:

  • a failure to significantly raise the minimal benchmarks set by WTO;

  • a weakening of the multilateral process and promotion of bilateralism and regional trade agreements at the expense of the multilateral process.

Benefits of a balanced agenda within a multilateral framework, on the other hand, include the following:

  • Tariffs reductions should lead to significant impetus for growth and India's international competitiveness.

  • Investment rules non-discrimination, transparency and predictability are the "three sisters" that should "charm" investors.

  • GATS the possibility to negotiate market access for services, and to build on the ground cleared in the Indian telecom and insurance sectors. Huge opportunities with a wide ranging impact on essential elements of infrastructure.

  • The possibility to facilitate a breakthrough on agriculture and anti-dumping.

Doha is a major opportunity to drive forward with the agenda. If we do not succeed we risk witnessing the collapse of the most promising of multilateral structures of our recent age, WTO, thereby blunting one of the most effective tools to reduce poverty.

We expect Indian industry to talk this over with our industry, take a long term view and take the lead over vested interests, and to encourage and guide its negotiators.

I thank the Indian delegation for coming here today. I would also like to thank the two main Federations, FICCI and CII, that in the space of few months have worked hard to touch base with their European homologues and to involve them in this process.

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