India - A Market Worth Exploring |
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(EDC Economics)
China has been
getting a lot of attention lately. All the superlatives have been used, and deservedly so. But there are other great opportunities out there, and one of them is India.
India is not just an also-ran
plodding along behind China. India has a much larger, well established middle class than China. In part, this is because India has not followed the typical development path from an agrarian society to one
dominated by manufacturing and then to economic maturity. Instead, it has practically skipped the middle step, graduating to a more mature economic structure with a thriving, high value-added service sector
all in one go.
Perhaps it is more apt to compare India to Ireland before its boom. During the early stages of that historic upswing, the coming Irish success story was not easily discernable in the
economic statistics, either. You had to go there yourself to see what was happening, especially the swarms of Irish expatriates who were returning to their homeland to take up well-paying jobs.
India
has not done all the reforms that facilitated the Irish boom, nor does it belong to the sort of benefactors club that Ireland had in the European Union. Nevertheless, progress is being made in India.
Certainly, India is much more open for business than it used to be. The share of international trade in GDP has risen from 15 per cent in 1990 to about 24 per cent today, putting India in the same league as
other large economies, such as the U.S., Japan and the Eurozone. The recent budget reduced the maximum tariff on non-farm imports from 20 per cent to 15 per cent, a positive step.
Foreign direct
investment is another matter. Foreign investors own less than US$60 billion in assets in India, which is less investment than China attracted in 2004 alone. Although there may be a lot of reasons for this,
many point to restrictive Indian labour laws as discouraging foreign investment. But the government is proposing to create special economic zones where labour laws will be more flexible. Corporate tax rates
were adjusted down in the recent budget, and the government plans to do more of this in future. They also are putting a great deal of emphasis on infrastructure investment -- transportation,
telecommunications, water and power == all good signs.
Canada is participating, albeit modestly. Canadian goods exports to India amounted to $828 million in 2004, of which $250 million was pulp and
paper, $100 million in specialty crops, and $175 million in machinery and equipment of various types. But at least our exports are growing fast: 13 per cent in 2003, 12 per cent in 2004, and a projected 14
per cent in 2005. Further, our exports of services to India are estimated to be well in excess of $300 million annually. Our imports from India, at $1.6 billion, are about double our exports. And, most of
those imports are consumer goods, not the sort of intermediate goods that would indicate that Canadian companies are globalizing their supply chains in India. Indeed, Canadians have invested a paltry $184
million in India to date.
The bottom line? India is not China, but in some ways it is more. There are multiple signs of an improving business climate, our exports there are growing rapidly, and the
biggest obstacle to foreign investment might simply be a lack of solid information. That makes India worth exploring. |
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Canada Trade Mission to India
(International Trade Canada)
On behalf of the Government of Canada, I am pleased to invite you to participate in
the Canada Trade Mission to Mumbai (formerly Bombay) and New Delhi, India, which I will be leading from April 3 to 7, 2005.
India is one of the emerging markets identified in the Speech from the
Throne as being of strategic importance for Canada. It is the world's 12th largest economy and our largest trading partner in South Asia.
Since Canada's re-engagement with India in 2001, there have
been numerous positive developments. Canadian merchandise exports to India reached a record high of $764.4 million in 2003, a 13.4 per cent increase over the previous year. India is expected to double its
investment in science and technology (S&T) over the next 10 years, to $8.25 billion. With last year's economy growing at a rate of more than 8.2 per cent and a burgeoning middle class of up to 250
million well-educated and professional people, India is the place to be for Canadian businesses and for the S&T community.
This mission will help position Canada more strategically within global
and regional markets, which India is so dramatically reshaping. India offers significant opportunities for Canadian trade and investment in the agriculture and financial services sectors, and in
infrastructure, specifically in the areas of transportation, energy and information and communication technologies. In addition, during his visit to India in January, Prime Minister Martin announced Canada's
intent to conclude an S&T arrangement with India and encouraged strategic collaboration in science and industrial technologies. Therefore, the mission will also focus on fostering S&T collaborations.
The mission will visit two of India's most influential business and research and development centers. In each city there will be a tailored program consisting of plenaries, seminars, hospitality
events and networking opportunities designed to introduce participants to local government decision makers, business leaders and research institutions, as well as to Canadian business people active in the
region with experience to share.
India's significant economic growth, combined with its opening up to international commerce, has made it one of the most attractive countries in the world for business
and S&T collaboration, and it offers tremendous potential for Canadian goods, services and technology. This mission is an excellent opportunity to strengthen our trade, investment and scientific
relations with this important market. Companies who would like to register for the mission or have any questions can click here.
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