Prime Minister of India - Dr. Manmohan Singh

PM's Address at Third India-Asean Business Summit

I am indeed very happy to have this opportunity to inaugurate the 3rd India-ASEAN Business Summit in our capital city of New Delhi. I extend a warm welcome to all delegates, especially our friends from ASEAN countries. I wish you all a fruitful and a very pleasant stay in India.

Deliberations at the annual India-ASEAN Business Summits have enriched the deliberations at the Heads of Government level meetings. This is natural, since today economic and commercial contact increasingly determines the nature of state to state interactions. The movement of people, capital, goods and services is playing an increasingly important role in establishing a framework for governments to define relations among nations. Therefore it is fair to say that economic engagement has an impact on political relations between nations. In this context, I am confident that your deliberations will have a beneficial and a powerful impact on our deliberations at the India-ASEAN Summit in Laos next month.

The intensification of India's relationship with ASEAN is a vital element of our government's foreign policy. It is very important to note that our traditionally friendly relations have now acquired a multi-dimensional and multi-faceted character. This is the logical culmination of the process begun in 1992, when India first became a sectoral dialogue partner of ASEAN.

A decade ago we unveiled our "Look East" policy. This is more than a mere political slogan, or a foreign policy orientation. It has a strong economic rationale and commercial content. We wish to "Look East" because of the centuries of interactions between us. This tradition, and our faith in the principles of democracy and pluralism, bring all of us together. We also share a desire for a stable, secure and equitable, new order. The question of achieving stability and security in our region is also a common factor, particularly as we collectively face a threat from similar foes, who oppose our core values. Therefore, as we 'Look East' and you 'Look West', it is natural that we look at each other in this enterprise of restoring to Asia its rightful place in the comity of nations.

Today, India and ASEAN have joined hands on a whole array of issues, ranging from regional trade and investment cooperation, to interaction on regional security. Our partnership is expanding to exciting new fields of science, technology and services. We are finding new ways to share our experiences and areas of expertise. There is a broad recognition of the enormous benefits flowing from greater integration between India and ASEAN.

The encompassing vision of such a closer integration is set out in the Framework Agreement on Comprehensive Economic Co-operation between India and ASEAN. What was envisaged was the creation of an India-ASEAN Regional Trade and Investment Area, which would include a Free Trade Area in goods, services and investment. This is to be achieved through progressive elimination of tariffs and non-tariff barriers in substantially all trade in goods, progressive liberalization of trade in services, with substantial sectoral coverage, and the establishment of a liberal and competitive investment regime that facilitates and promotes investment. I would like to take this opportunity to affirm once again that our Government will intensify the process of regional cooperation and integration between India and ASEAN.

Integration is a process that is being driven today, both by the technological revolution that shrinks distances, and by interconnected population. This is visible in the proliferation of regional co-operation mechanisms across the globe, including in our own region. Therefore, it is only inevitable that we seek to take the existing India-ASEAN relationship to a higher level, where we envision an Asian Economic Community, which encompasses ASEAN, China, Japan, Korea and India. Such a community would release enormous creative energies of our people. One cannot but be captivated by the vision of an integrated market, spanning the distance from the Himalayas to the Pacific Ocean, linked by efficient road, rail, air and shipping services. This community of nations would constitute an "arc of advantage", across which there would be large-scale movement of people, capital, ideas, and creativity. Such a community would be roughly the size of the European Union in terms of income, and bigger than NAFTA in terms of trade. It would account for half the world's population, and it would hold foreign exchange reserves exceeding those of the EU and NAFTA put together. This is an idea whose time is fast approaching, and we must be prepared for it collectively.

In preparing ourselves for this ambitious goal, there is much that we have already undertaken. We have embarked on projects to interconnect existing roads and rail links, we are striving to increase flight services and destinations, to provide multi-modal transportation linkages and to provide optical-fibre supported communications. We are attempting to expand our partnership in the new knowledge economy, which dominates the world, covering areas such as information technology, communications and biotechnology. These new initiatives will bring us closer - physically and virtually - and create the necessary linkages, which will further bind our countries together.

However, we need to find ways of emphasizing the logic of such partnerships within our own countries. One such example of such an effort is the India-ASEAN Car Rally, which I hope to flag off next month from Guwahati. This rally will run through ten countries before finishing in Indonesia. It will dramatically symbolize the effort to forge new linkages, while embodying the spirit of our cooperation.

We are working towards completion of FTA negotiations between India and the ASEAN. A balanced expansion of trade will provide the best argument for local industries to embrace the potential benefit of these arrangements. Only if we exhibit pragmatism, flexibility and courage will India-ASEAN trade relations grow in a manner commensurate with its vast latent potential. In last year's business summit, we have already set ourselves the target of raising our trade to US $ 15 billion by the year 2005, and to US$30 billion by the year 2007. These are achievable targets, if we focus on commodities, which show great potential for trade, as some recent studies have clearly shown. We must ensure that our trade baskets increase qualitatively, in value terms, and in terms of the diversity of products in the trade basket.

The first fruits of trade liberalization will be available through the Early Harvest Programme, which provides for immediate tariff concessions. This is a confidence building measure and a harbinger of changes, which will follow in years to come. I sincerely hope that the chambers of commerce will effectively disseminate information on the concessions so that trade and industry in our countries, particularly small and medium enterprises, can take full advantage of the benefits available under the Scheme.

At the same time, it is essential to recognize that our different historical experiences, and our differing levels of development provide us with both a challenge and an opportunity. The challenge of integrating economies at differing levels of development is evident, but the opportunity of learning from each other's experiences is also an investment in our future. We must therefore set ourselves the target of working with each other for our common, collective benefit.

Investment, as I have always said is, in the final analysis, an act of faith. The growing linkages between India and South East Asia are signs and symbols that mutual benefit and faith is growing. But I think it is evident to all that we can certainly do much better in this regard and we must commit ourselves to that noble goal.

As you know, our Government has set itself the objective of stepping up the rate of growth of our economy to at least 7 per cent to 8 per cent during the next decade. This acceleration of economic growth will require a substantial increase in the volume of investment in our economy, both domestic and foreign. We shall make every effort to promote such investment and to create a climate conducive for investors and entrepreneurs to use the productive capacities and resources of our people.

I recognize that for investments to flow improvements are required in our physical infrastructure and this area I assure you, will receive the highest priority of our Government. We have to create the right environment in which public-private partnerships can thrive, resulting not only in the efficient use of our resources but also in the efficient management and running of infrastructural services. We are now working towards the creation of a regulatory framework in infrastructure sectors that would be transparent and independent and which would be based on international best practices.

Our requirements of capital in infrastructure are indeed very large. The requirements of our airports and railways will alone amount to over $55 billion in the next ten years. Our power sector needs $75 billion and the telecom sector $25 billion over the next five years. We believe the Indian economy can absorb up to $150 billion of foreign investment in the infrastructure sector over the next ten years. There is, therefore, a large window of opportunity for ASEAN businessmen to invest in our country.

Equally, Indian business must invest in South-East Asia. We have some attractive examples of successful Indian enterprises in the region. But we need more, especially in the newly industrializing economies of ASEAN where opportunities for new investment are presenting themselves. Indian businessmen must be more proactive in exploring markets and investment opportunities in South-East Asia and to build long-term durable relationships across the countries of the region.

Our State governments should also be proactive in developing mutually beneficial cooperation with the ASEAN region. The development of ports in West Bengal, Orissa, Andhra Pradesh and Tamil Nadu can re-build maritime links of the Coromandel Coast with South-East Asia. While in the North-East, the Central government is committed to developing the infrastructure of trade and development, there is much that our State governments can do to promote trade and commerce with countries of South-East Asia.

It is interesting to note that the eminent maritime historian, Sinnappa Arasaratnam, recalls in his classic work on "Maritime India" how "India benefited from the liberal regime that all Indian states permitted along the coast, and the autonomy they gave to the communities that dwelt there. This enabled the littoral states to develop in a fashion complementary to the interior and to function with little interference from groups that would not have understood the needs and demands of the predominant activity of commerce."

There is a lesson in this for all of us today. I would like to affirm that our government will be committed to policies that enable us to work more closely and more intimately with our neighbours, and to support the efforts of State governments in promoting business to business links between India and South East Asia. It is such mutually beneficial business links that will, in the final analysis, give meaning to our "Look East" policy. Moreover, it is this that will eventually give shape to the idea of an Asian century. With these words, I wish your deliberations all success.