Former Prime Minister of India - Shri Atal Bihari Vajpayee

Prime Minister Shri Atal Bihari Vajpayee's address at the 3rd India-EU Business Summit

The following is the text of Prime Minister, Shri Atal Bihari Vajpayee’s address at the India-EU Business Summit at Copenhagen today:

~I thank you for your warm welcome.

It is a great pleasure to be here in this beautiful capital of Denmark to carry forward the India-EU Summit level dialogue, which we commenced in Lisbon two years ago. I am delighted that this business summit has also become an integral part of this dialogue, providing a high-level forum for networking and in-depth exchange of business experiences.

Friends,

A basic symmetry in our circumstances and some core values underpin the India-European Union partnership. We are both global actors in a multi-polar world. We are large multicultural and multilingual federal entities with strong regional identities. We value democracy. We recognize the virtues of consultations and consensus in a multilateral approach. These are the political values that drive our economic progress and social development.

Our dialogue touches upon major issues of the world. We are partners in promoting global peace and security. We agree that the pre-eminent challenges before the international community are poverty alleviation and sustainable development.

The European Union is of great importance to us as India’s largest trading partner, accounting for about a quarter of our external trade. It is the largest overseas investor in India. Much of its investment is in high technology areas.

Conversely, we believe Europe’s governments and businesses see the immense potential in India, given the synergies for business collaboration and economic interaction.

The Indian economy has been living up to this expectation, it is today the world’s fourth largest economy. Our annual average growth has been over 5% since 1980. It is the highest ever achieved over a comparable period by any democracy in the world. In the first quarter of this fiscal year, our economic growth has been over 6%.

This is not a mean achievement in an uncertain post-September 11 environment marked by nervous global markets, rising oil prices and falling commodity prices. It has been achieved also in the face of a relentless and sustained terrorism in parts of our country – masterminded from across our borders and designed to create political turbulence, economic disruption and social disharmony.

Our economic fundamentals remain strong. Inflation is in the low single digit range. Our foreign exchange reserves of over 13 months of import cover are among the world’s highest. There are encouraging signs of an industrial recovery. Exports are picking up. Our food reserves of over 60 million tonnes have easily offset the shortfall in agricultural production due to the deficient rainfall this year.

India has one of the fastest growing telecom, insurance, and financial services markets in the world. Our strengths in IT and biotechnology are well known. Our laws are transparent, our judicial system is impartial and experienced in the ways of a market economy. Our markets and our skilled work force continue to grow. Our goal is to achieve an average annual growth rate of 8% over the next five years.

The continued investor confidence in the country is reflected in the highest ever inflows of foreign direct investment last year. Unlike those in other countries, our official foreign investment figures do not include reinvested earnings and overseas commercial borrowings. The International Finance Corporation has recently pointed out that if these are included, India attracts about 8 billion dollars of FDI annually – or about 1.7% of its GDP – which compares favourably with other developing countries.

We often hear critical comments about the pace of our reforms. But remember that the same sub-continental size and population, which makes India an attractive market, also accommodates a diversity of perspectives, interests and needs. There are vast disparities in incomes and living conditions.

A democratically elected government has to be sensitive to these realities. Public accountability and a social conscience have to govern its actions. It cannot adopt a shock therapy approach to economic reform. To borrow a metaphor from an earlier era and a different political context, what we are trying to implement is economic liberalization with a human face.

Our approach is vindicated by the fact that among the countries which liberalized their economies in the early 1990’s, India alone moved to a higher growth trajectory without an interim period of recession.

Europe also confronted the reality of its diversity during its debates on integration, enlargement, single currency, and common foreign and security policy. You discovered that only a process of consensus with participation of all the principal stakeholders can generate sustainable policies. You can therefore understand our perspectives.

It has become the fashion these days to liken economies to real and mythical creatures like elephants, tigers and dragons. The Indian economy is often identified with the elephant. I have no problem with this analogy. Elephants may take time to get all parts of their vast bodies moving forward in unison. But once they actually start moving, the momentum is very difficult to divert, slow down, stop or reverse. And when they move, the forest shakes.

Of course, some shortcomings still disappoint the expectations of our overseas business partners. We are moving to rectify them. We are building a national consensus on labour reforms, heeding the needs of both business and labour. High priority infrastructure projects are being given special attention. We know that foreign investors are often vexed by an excess of procedure, paperwork and bureaucracy. This is not a malaise unique to India. We are trying to tackle it with a national programme involving e-governance.

India’s growing markets in a liberlizing regime and the European Union’s thrust for expansion and diversification provide rapidly growing prospects for India-EU cooperation.

India can benefit from the modern manufacturing technologies developed in Europe to rejuvenate traditional industries like steel and textiles. Similarly, there are synergies between our respective small and medium enterprises. Your technologies can link with our cost effective human and other resources. We are enacting a new Intellectual Property Rights regime in India, which would afford protection to the foreign technology exporter, fully in line with WTO commitments.

In the social sector, India and EU have cooperated in tackling poverty and backwardness. We appreciate the EU programmes in India for universalization of elementary education and improvement of health services among disadvantaged population groups.

In the knowledge-based industries of the new economy, the EU can leverage the opportunities, which India can offer. There are also objective factors encouraging cooperation in services. But for an optimum exploitation of these opportunities, the EU would have to show the same commitment to free mobility of skills as it does to free movement of capital and services.

Friends,

We cannot view cooperation between India and the European Union without reference to our shared commitment to building a world free of disparities and equal opportunities for all nations.

The global economy is facing a prolonged slowdown. This is not merely because of the cyclical nature of business. Its roots run deeper into the structural imbalances of the global economy. It is widely accepted that the most reliable stimulus for sustainable growth of the developed economies is their constructive engagement with the preservation of their environmental resources, social values and cultural identities.

The underlying philosophy of this form of engagement is not charity. It is simply enlightened self-interest. Today, the development deficit from the uneven spread of the benefits of globalization threatens the sustainable prosperity of the developed countries.

The best minds of India and Europe have proclaimed this vision, but its realization has eluded us. In the 21st century, we cannot afford the consequences of failure in this endeavour.

We hope the EU would address the concerns of the developing world on these matters. A starting point could be the dismantling of the high agricultural subsidies, which greatly harm the growth prospects of developing countries. We also have a serious problem with non-tariff barriers against developing country products on ostensible environmental or social concerns. Other developmental linkages can follow.

Friends,

Europe has taken an epoch-making step this year by adopting a single currency. It soon goes in for enlargement. We hope these steps will act as a stimulus for Europe’s economic growth. We also hope that the consequent spurt in intra-Europe economic activity will synergize opportunities for its non-European partners.

I thank the Danish Confederation of Industries and the other organizers of this summit meeting for giving me this opportunity to speak to you. The globalizing world demands a new thrust to the India-EU economic and commercial partnership. Our governments and businesses should come together to generate this thrust. India is willing to make this effort.

Thank you~.