IT, Biotech, Pharmaceuticals, Agro Food are among items Suggested for Economic Cooperation Between India and Expanded EU
ASSOCHAM Press Release
Sunday, May 01, 2005
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) sees tremendous scope for enhancing economic ties with Europe and has mooted a four pronged strategy for expanding India’s: trade basket with the enlarged European Union (EU) in areas such as Information Technology & Communication, Biotech & Pharmaceuticals, Agro foods Processing and Textiles.
In a study conducted by ASSOCHAM on “India - European Union Strategic Ties”, it has been stressed that the expanded EU, throws open opportunities of higher volumes of economic activities in the aforesaid areas because of inherent strength that the Indian industry has acquired in sectors like Information & Technology and Communication (IT), Biotech & Pharmaceuticals, Agro foods Processing and Textiles.
Releasing the Study here on today, ASSOCHAM President Mr. Mahendra K Sanghi said “Information Technology is an area where enlargement provides benefits to Indian IT companies for expanding their reach in the EU -25. Indian IT companies will gain primarily by setting up their offices in low cost countries and by catering to the needs of new enlarged EU. India”s IT experts can also club their sophisticated project management skills with the acceding countries’ IT Skills. There is considerable security concern among European nations for their airports, ports, public utilities etc. Therefore, there is immense scope for Indo-EU partnership in strengthening their existing security systems with the help of Indian IT expertise. ”
Mr. Sanghi pointed it out that IT exports from India have more than doubled in the last five years from 850 million Euros in 1999-2000 to 2160 million Euros in 2003-2004. EU accounts for 20 per cent of India’s software exports.
However, India’s IT sector has been concentrating more on UK due to ready pool of English language experts.
The Chamber has suggested that there is a need to extend India’s human resources to non-English speaking in software development and IT Enabled Services. Efforts should be made to take initiatives in European languages other than English.
Others suggestions of Assocham include, Improved harmonisation and transparency on regulations, governing the IT industry. Data protection or data security is a very sensitive matter and there is a need to address this if India wishes to continue its march in IT sector.
Biotech and Pharmaceuticals should be another priority area for mutual co-operation between India and EU because India has substantial pharmaceutical and chemical sector that export about 260 million Euro with about 30 million Euro going to newly acceding countries. However, with these countries becoming a part of EU , now EU regulations will apply to them. EU’s new regulations for chemical sectors like REACH are quite expensive to adhere to with the costs being prohibitive. However, Indian pharma companies can become the outsourcing hub for the EU pharma companies, stressed Mr Sanghi.
The ASSOCHAM chief also felt that the Biotech sector in India is plagued by multiple laws and regulations. India itself must put its own house in order and introduce single window clearance. The sector by focusing on innovation and development of propriety technologies will be able to create a way for itself in EU which is showing some softening towards Genetically Modified products due to pressure from US.
Agro Food Processing sector is still another area in which adequate stress should be laid for co-operation. Mr. Sanghi also mentioned that the while bilateral trade in this area has more than doubled in the last decade, with balance of trade in favour of India, there is a huge potential to take this further.
India’s top exports to EU include coffee, tea, spice, fruits and nuts, cereals and rice, animal and vegetable fats and oils, gums, resins among others.
EU’s exports to India include animal or vegetable fats and oils, beverage spirits and vinegar, oilseeds and oleaginous fruits, byproducts from food industries, dairy products and honey.
Indian Government has taken some measures to encourage exports of agri products through Vishesh Krishi Upaj Yojana in the National Foreign Trade Policy in 2004-2005 besides encouraging Agri Export Zones.
Mr. Sanghi also pointed it out that India’s textiles exports to EU stood at (US$ 2576.90 million) during the year 2003-2004. But with the dismantling of quotas on January 1, 2005, the developments in EU are significant to India’s textiles and clothing sector.
It is also to be noted that the domestic textiles industry is lobbying hard for exclusion of India textiles and garments from the new GSP coming into effect from July this year under which some of the items will attract a tariff of 9.5 per cent instead of 12.5 per cent over others. Industry must in the immediate future lobby hard in Brussels for this benefit. India also faces competition from newly acceding countries like Hungary and the ones which are negotiating entry like Turkey.
The ministry of Textiles has already submitted a strategy paper to the Prime Minister which recommends flexibility in labour laws, priority status to textiles and garment shipments, besides neutralizing levies including the one on power in some states.
The industry, however, has to gear up to face the Chinese onslaught on the EU’s market besides countries like Sri Lanka which have FTA with it. Certain measures from both sides can lead to doubling of the exports by 2009.