Former Prime Minister of India - Shri Atal Bihari Vajpayee

~It is a great pleasure to be here among eminent business representatives from ASEAN, East Asia and India. I congratulate the organizers of this first ASEAN Business and Investment Summit. Events like these provide valuable opportunities for interaction among business and industry of our countries and for exchange of perspectives between Governments and industry.

While the 20^th century economy was driven by capital accumulation, manufacturing technologies and labour power, the 21^st century is defined by knowledge and human capital. It is this that gives strength to the Asian identity. There is an emerging perception that this will be the century of Asia’s pre-eminence. The brainpower of Asian scientists and engineers, the dynamism of our businessmen and industrialists, our intellectual and human resource capital – all these support this perception. The growing economic weight of Asia is strengthened by favourable demographic trends, and is no longer constrained by Cold War divisions.

India, ASEAN and the countries of East Asia are a part of this trend. ASEAN is already in an advanced stage of economic integration. With each of China, Japan and Korea also, ASEAN has a well-developed and diverse economic relationship. India has lagged behind, for a variety of political and economic reasons. However, this situation is changing rapidly, and it is the exciting potential of the future India-ASEAN partnership that I propose to put before you today.

Over the last 12 years, the Indian economy has maintained an average annual growth of over 6%, which is better than that of most other countries. Our interest rates are falling, inflation has been kept down, and foreign exchange reserves are growing rapidly. India remained unaffected by the Asian financial crisis a few years ago. We have targeted an 8% growth over the next five years. As our economic base is large, there is considerable untapped potential for India’s continued – and even accelerated – economic growth.

Perceptions shape decisions. Often they are flawed. Sometimes, they are incomplete. The rich cultural diversity and spiritual traditions of India are well known, but they constitute only one aspect of India. There is another India, the India of the 21^st century, which is still not so well known, with its many strengths:

One, an inherently strong economy driven primarily by indigenous skills and domestic enterprise.

Two, a growing and accessible domestic market, with import and investment barriers falling away. To take just one random example of the growth of the market: in the last few months, it has been absorbing about 2 million mobile phones a month. Import duties are moving towards ASEAN levels, and sectoral caps on foreign investment are rising.

Three, a rich pool of human resources – English speaking, with R&D skills, technological training and managerial capabilities.

Four, some special capabilities in state-of-the-art technologies. India is one of only three countries – the others are USA and Japan – to have indigenously designed and manufactured supercomputers. It is one of only 6 countries, which can build and launch its own satellites.

Five, global leadership in technologies of the Knowledge Economy. India’s pre-eminent position in IT and IT-enabled services has led global companies to set up captives in India or to outsource their operations to quality Indian service providers.

Six, a sound and transparent financial system, with well-managed banking and insurance sectors, and vibrant capital markets. Our paperless, computer-driven National Stock Exchange is the third largest in the world, in terms of number of annual transactions.

India is today a country on the move. We are experiencing many revolutions simultaneously. There is, of course, the IT revolution. This in turn has unleashed a socio-cultural revolution, which has empowered hundreds of millions of our citizens, strengthening our democracy and stimulating our creativity. We are experiencing a demographic revolution, where the numbers of young people are increasing. Already, 54% of our population is below 25 years of age. This has created a revolution of expectations, where a powerful new force of young people, full of optimism and ambition, fired by boundless energy, is actively seeking opportunities for wealth, success and prosperity. The combined effect of these has been a psychological revolution, in which a defensive, introverted approach has given way to an outward-looking, self-confident attitude, willing to accept challenges and take risks, rejecting fear and shunning fatalism.

It is this India that seeks to partner ASEAN in this era of globalization. India’s trade and economic interaction with the ASEAN countries has been steadily growing, but not fast enough. A year ago at the First India-ASEAN Business Summit, I had said that the India-ASEAN trade of less than 10 billion dollars does not do justice to our combined population of one and a half billion people, producing a trillion and a half dollars worth of goods and services annually. Our trade has since grown by about 25%, but my comment remains valid.

We have recognized this fact in the India-ASEAN Framework Agreement for Comprehensive Economic Cooperation, which we have been negotiating over the past year. We are working on eliminating trade and investment barriers to facilitate business.

At the same time, India is conscious of the concerns of the new ASEAN members. We are offering unilateral tariff concessions on items of export interest to the CLMV countries. We are also seeking to incorporate an Early Harvest scheme to provide the incentive for a long-term engagement. If we proceed along this course, we can target a trade turnover of US$ 30 billion by 2007 and a Free Trade Area within 10 years.

A study, commissioned by our apex commerce & industry organizations, has highlighted five main areas with maximum promise for growth:

Indian IT enabled services create multiple opportunities for collaboration in embedded software or joint development of industry specific solutions. ASEAN countries can outsource their operations to quality Indian service providers at competitive prices. Today, South East Asian countries import most of their IT products from the West. The irony is that most of these products are actually created by Indian sub-contractors. The result is a double disadvantage: you pay much more, and India gets much less.

The Indian financial services industry is growing rapidly, driven by deregulation of insurance and investment in the banking sector by private companies and foreign banks. ASEAN investors will find attractive opportunities in personal financial services, insurance and corporate banking. India is poised to emerge as an additional global hub for financial transactions.

The Indian pharmaceutical industry has achieved global recognition. The strength of this industry is low cost, high quality generics. Branded and patented medicines are also beginning to emerge as an important segment of the industry. ASEAN can source its imports of low cost generics from India, or shift manufacturing base to India.

Indian entertainment business has benefited from deregulation and export opportunities. Joint ventures for TV content production and animation software exports present attractive opportunities for India and ASEAN.

India has placed special emphasis on infrastructural development to stimulate rapid economic growth. This includes de-regulation of all segments of our telecom industry and upgradation of highways, bridges, ports, airports and convention centres. Many ASEAN companies are already present in these and other sectors. There are many other opportunities here for Asian business.

For free trade and open economic interaction, we must review, improve and harmonise our travel-related regulations and restrictions, including visa regimes. We have to upgrade our air, sea, road and rail links in capacity and quality, to meet new demands. To improve the profitability of business activities and tourist ventures, we should develop cross-regional links of tourist centres to enhance the synergy of Asian destinations.

I will say a brief word about India’s investment regime. It is liberal and transparent, as befits a democracy like ours. We may occasionally have some problems, because of the difficulties in reconciling competing interests and concerns. This is normal in an open, democratic set-up. We are constantly trying to refine our regulations and procedures. All the same, if you analyse the experience of our foreign investors, returns on investments in India are generally higher. Repatriation of profits is also much easier than in many other countries.

Investors have to understand that India’s continental size and diversity are unique. Marketing or investment strategies that may have worked well elsewhere may need to be tailored differently for India. Those who understand this do well. Companies that have taken the trouble of finding the right keys to unlock the doors of the Indian consumer’s mind have done well for themselves. People tell me that successful investors often paint a deliberately pessimistic picture to discourage competitors from entering a lucrative market!

In spite of the stalemate at the Cancun Ministerial Conference, a rule-based and fair multi-lateral trading system should remain our goal. But while we search for this ideal, regional trading arrangements offer immediate advantages, particularly for geographically contiguous regions. They can provide our domestic industry and agriculture with a valuable learning period, before being exposed to the far greater competition of global free trade.

Non-Asians view Asia as the principal market of the future. But it will also emerge as a manufacturing hub and a global provider of services. In the next 50 years, as the population of the developed world ages, a younger and better-educated work force will emerge in Asia to fill the breach. This generation will drive the future growth of the global economy. Asian countries should work towards strengthening their mutual synergies, so that they are strategically placed to derive maximum benefit from the emerging opportunities. The India-ASEAN partnership should energise this process to move us closer to our shared goal of making this truly the Asian century.

Thank you~.