As a new world order is emerging, the developing world is increasingly becoming an important driver of the world’s economy, said Mr Jyotiraditya Scindia, Minister of State for Commerce and Industry. He was speaking at the inaugural session of ‘New Focus Markets: LAC & Africa’, organized by the Confederation of Indian Industry in New Delhi on May 15, 2012.
Elaborating further, he said Asia’s share of the global economy in terms of purchasing power parity has risen from 7 per cent in 1980 to 25 per cent in 2010. This changing landscape, he said, presents tremendous opportunities even against the backdrop of the continuing global financial crisis. Over the years, India has taken several initiatives to boost economic growth, especially exports, which have played a pivotal role in India’s growth. To address challenges in exports, a special Task Force on Transaction Costs was set up in 2010, which ensured benefits worth Rs 2100 crores to the exporter community in perpetuity, he said.
To sustain growth in exports, he said a market diversification strategy in keeping with the changing global economic scenario has been put in place with emphasis on tapping into new markets. The Government is thus focusing on Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) for market expansion. He said 10 FTAs have been successfully completed, while 5 Limited scope PTAs are in the process, and 7 more proposals for FTAs are under consideration.
Speaking on India’s engagement with the LAC Region, he said both India and LAC advocate liberalization of trade and have entered into Regional Trade Agreements such as the India-Mercosur Preferential Trade Agreement and the India Chile Preferential Trade Agreement. Speaking about sectors that offered potential he identified Agriculture, Pharmaceuticals, Mining and Renewable Energy. In the area of Renewable Energy, he said India and Brazil have high potential for wind power generation.
On India-Africa engagement, he said Africa’s bilateral trade with India has grown from US$ 1 billion in 1990 to US$ 3 billion in 2000. While the global financial crises saw the figure drop, India is working at increasing the engagement across different countries and products. Apart from oil and natural resources, India engages with Africa in agriculture, health, information and communication technology (ICT), education and skills transfer, to name a few. Going forward, he said, the sectors to focus on would be Agriculture, Small and Medium Enterprises, Finance and Tourism. Cooperation in Social Development and capacity building would be another area of cooperation given that both the countries are young societies keen to translate the demographic dividend into effective growth.
To further increase the engagement, the Minister spoke of negotiations with South Africa Customs Union (SACU) for a PTA, and the setting up of the India Africa Business Council to develop a road map for business partnership.
He concluded his address by saying that engaging with the LAC and African regions will give further impetus to the growth and synergetic opportunity for all.
Elaborating on the Government’s perspective, Mr Rajeev Kher, Additional Secretary, Ministry of Commerce and Industry, said that the Government has been taking steps to boost exports. Challenges such as a widening current accounts deficit made it move away from the earlier-held view of exports as a phenomenon of surplus. It recognized that exports were an essential economic activity with a wider and greater impact on the country’s economy. This, coupled with the recognition that the conventional approach and traditional markets would not work anymore, the Department of Commerce formulated a strategy keeping in mind issues such as market diversification and product diversification.
Giving the industry’s perspective, Mr Sunil Munjal, Past President CII, stressed on the need to move beyond conventional markets. He said that today, South-South Trade has become a beacon of hope in these trying times. There is tremendous potential as can be seen in the way India-Africa trade has grown over the years: from US$ 967 million in 1991 to US$ 50 billion in the first quarter of 2011. India’s economic engagement has been growing beyond gold and oil, which India imports, and a host of manufactured goods that it exports to Africa. Several Indian companies such as the Godrej Group, Bharti Airtel, Vedanta have acquired companies or have other business interests in Africa and several other companies such as L&T, NIIT are looking to follow in their footsteps.
Earlier, in his welcome address, Mr Sanjay Budhia, Chairman, CII National Committee on Exports & Imports and Managing Director, Patton Group, welcomed the Minister and thanked him for his guidance and support to the industry.