Economic Highlights
New
Delhi, 25 October 2007
Building Bridges With
South-East
MULTI-LAYERED STRATEGY
NEEDING
By Dr. Vinod Mehta
(Former
Research Director, ICSSR)
One of the features of the Narasimha
Rao Government’s liberal economic policies was to look towards the East, i.e.,
South-East Asia and later East Asia and
Pacific countries for business, trade and investments. This is being steadily pursued by all the
Governments in power since 1991.
According to all available
data and projections for the future, the Asian region is growing faster than
the European or the American region, notwithstanding the melt down of South-East
Asian economies a few years ago. This means that there are more business
opportunities in the Asian region for Indian business as well as for the Asian
business in India.
In the past more than one-and-a-half
decade India’s
trade ties with the South-East Asian and East Asian countries have increased
significantly. Yet there is always a room for still more growth in trade
ties.
The Indian economy is
already growing at the rate of nine per cent and the Eleventh Plan has put the
target figure above nine per cent. As
against this, the individual Asian economies like Thailand,
South Korea, Malaysia, Singapore,
Indonesia and Taiwan are
experiencing growth rates ranging between 8 per cent to 10 per cent. This
indicates indirectly how the markets in these countries are growing and if India can
develop comprehensive and an appropriate investment and trade strategy it can
capture a part of this market.
It is, however, not going
to be an easy task. India will have
to work hard, indeed very hard, to penetrate these markets as it has ignored
this region for a very long time. In the meantime Japan,
South Korea, Taiwan and
other countries made huge investments and captured a big slice of these
markets. Therefore, the strategy to come closer to the Asian countries will
have to be a multi-layered strategy functioning simultaneously at various
levels.
The relationships
established with the Asian countries in the past one-and-a-half decade needs to
be vigorously followed up by Government to Government relationship like setting
up of inter-governmental councils in the fields of economic affairs, education,
science and technology, tourism and so on.
The regular exchange of
parliamentary delegations as well as bureaucrats needs to be
institutionalized. This may be seen as
confidence building measures to remove the pointless mutual suspicion that has
crept into each others’ mind.
While building these
measures we must also open our defence training colleges to military officers
from the Asian countries. This is one way of underscoring the point that India has no
territorial designs whatsoever and that it has the stability of the region
uppermost in its mind.
Already a few military
officers from Thailand
have been trained in Indian military colleges.
This defence link needs to be strengthened and institutionalized with
almost all the South East Asian countries.
The most recent pact has been with the Singapore Government.
At the same time the
Government needs to provide scholarships for higher education and research in India to
students from these Asian countries.
This is one way of creating long term interest in India among the
Asian countries. Over a period of time India would have created an India lobby in
these countries.
The last thing, which the Government
needs to do in this direction, is to strengthen all types of communication infrastructure
including air and shipping services. India’s air connections with the capitals of
Asian countries are less when compared with European countries or America. India needs to be linked to almost
all the Asian capitals by at least a daily air service.
At the moment we have no
direct air links with Indonesia,
Philippines, Brunei, Cambodia,
Vietnam, Laos and Myanmar. This comes in the way of
fully exploiting the business opportunities that may exist between India and other
Asian countries.
Apart from strengthening
the communication infrastructure between India and capitals of the Asian
countries, there is also a need to strengthen relationship in the financial
sector including insurance. Till now either the American or the European banks
have ensured their presence in India.
The presence of Asian banks
has been negligible. Some years ago the
Bangkok Bank from Thailand
and the Development Bank of Singapore
(DBS Bank) have been permitted to open their offices in India and that
is that.
A clear cut policy needs to
be developed here so that at least one bank from each of the Asian country has
significant presence in India and one Indian bank present in almost all the
Asian capitals.
It may also be a good idea
to start joint ventures with Asian insurance companies in the field of general
and maritime insurance. This will make the financing of joint ventures in India and other
Asian countries much easier.
While developing economic
relations with the Asian countries, the role of the medium and small scale
sector should not be ignored. There are
many medium and small enterprises in some of these Asian countries which have
the latest technologies and may be willing to enter into technical
collaboration with their Indian counterparts.
The field is very vast ranging from the manufacture of pencil sharpeners
to plastic goods and auto parts.
Unlike the large industrial
houses which have the resources to strike deals on their own strength, the
medium and small sector may need the support of some institutions like various
chambers of commerce and industry.
Finally, to find a foothold in the
Asian markets, Indian business will have to do a thorough research of the
markets, consumer preferences and trading practices in each of the Asian
countries. The Japanese, European and
American brand names are well established in these countries.
Moreover, the consumer in Asian
country has become very price and quality conscious. Therefore, to succeed in such a market, the
Indian exporter and manufacturer will have to sell quality products at
competitive prices. This would also hold
true for a large number of other commodities and services, which we may be
thinking of exporting to these countries.
What is needed is a collective
effort on the part of Indian business to create a favourable image of
themselves among both the individual and institutional consumers in Asian
countries.
Besides, the idea of free trade area
between India
and South-East Asian countries needs to be pursued vigorously. From here we can then move to Latin American
countries for increased trade as we are now presently doing. ---- INFA
(Copyright
India News & Feature Alliance)
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