Prime Minister of India - Dr. Manmohan Singh

PM's speech at the Indo-EU Business Summit

"It gives me great pleasure to join the representatives of Indian and EU industry for the Indo-EU Business Summit meeting. I am glad that this event coincides with the annual political Summit. It enables the governments to benefit from the advice and suggestions of captains of industry.

The global economy faces uncertain times. The crisis in the financial markets has cast its shadow on global liquidity. We have also seen sharp rises in petroleum and food prices. It is unfortunate that just as many developing countries were beginning to benefit from the positive potential of globalisation, the tide has turned and the economic prospects have deteriorated.

I emphasise the urgent need to restore confidence in the functioning of international financial markets and in the collective ability to coordinate macro economic policy in the major economies in a manner conducive to the restoration of global growth.

The Indian economy has grown at an average rate of 9% in the past four years. It is expected to slow down in 2008-09 reflecting the slow down in the global economy. Even so, it will grow between 7.5-8%. More importantly our medium term prospects remain strong based on sound fundamentals. We have weathered the current credit crisis facing the global banking and financial sectors. Our savings rate is touching 35%. Our direct tax collections for the first five months of the current financial year grew by 48 per cent compared to last year. India would, therefore, continue to provide a stable platform for businessmen and investors.

The Indian market is changing rapidly. The middle class is expanding. Rural consumers are shifting from commodities to branded products. There is growing urbanization and a surge in demand for consumer durables and luxury brands. The upside for growth therefore is enormous, with rising incomes continuing to support demand. Our bilateral trade has been experiencing double digit annual growth for many years now. There is reason to believe that we could increase our annual bilateral trade volume to 100 billion Euros within the next five years.

The early conclusion of the Broad-based Trade and Investment Agreement would no doubt stimulate such growth and achievement of these targets even earlier.

Special Economic Zones are at the centre of our strategy for export growth. As many as 253 SEZs have been notified and SEZ exports have nearly trebled in the past two years. We have crafted a very attractive set of incentives for developers setting up SEZs and also for the units to be located within such Zones.

I would like to draw your attention to seven areas where we see clear synergies for cooperation: investments in infrastructure including power generation, cooperation in services, skill development, solar energy, nuclear commerce, agricultural productivity and research and space. In many of these areas, it would be our expectation that technology transfers would be the key to promoting the synergies.

Our Government is placing special emphasis on infrastructure development - both urban and rural infrastructure. Huge investments are needed in the areas of energy, power, roads, railways, airports and ports. We hope that Foreign Direct Investment would contribute substantially. I urge you to look at the investor friendly policy regime we have created, including by encouraging public-private partnerships.

Services is not only the fastest growing sector of our economy but also the most visible face of India in the global economy. The potential however is enormous and we need to facilitate the collaboration between us in this area.

We seek easing of restrictions on movement of people, agreement on totalization of social security and improvement in living conditions of our professionals.

To retain the competitive advantage we have in manpower, we have embarked on a massive programme of expansion of capacity at all levels of education, including vocational education. We are aware of the expertise that EU Member States have developed in this area. Innovative ways to promote vocational training including through its integration into our secondary school programs is a priority for my Government. I see clear synergies between your strengths and our needs in skill development.

India today has a renewable power capacity of over 12,000 MW, constituting around 8% of the total installed capacity in the country. However, almost none of this comes from grid connected solar power. We have recently begun work on a 50 MW demonstration solar power program in public private partnership mode. We have also launched a National Solar Mission as part of our National Action Plan on Climate Change. I believe solar energy can emerge as a priority area of our cooperation.

Civil nuclear commerce is another area that has opened up for cooperation. Today we signed a bilateral agreement in this area with France and we expect to finalise agreements with other European partners too.

I have spoken of the need to have a second Green Revolution to respond to the global agricultural crisis. This cannot be realized without business innovation and enterprise. Development of new technologies, input use efficiency and improved seed and crop selection are areas where we could join hands.

India has a successful space program for launch of small and medium class satellites in both near earth and geo-stationary orbits. EU could make use of our launch vehicles for meeting launch requirements for small and medium class payloads.

The democratic system in India may seem a little unwieldy at times. We recognize that there are infrastructure bottlenecks, system delays and problems in land acquisition.

We are addressing these issues in a transparent manner. But for every project that faces problems, there are hundreds that take off. So I urge you to have faith and to invest in the future of our relationship.

Lord Keynes once said that the difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify....into every corner of our minds.

In conclusion, I wish to stress my conviction that India-EU economic and trade ties will not only be to our mutual benefit but will also be a stabilizing force for the global economy. I see a bright future for our partnership built on your innovation, dynamism and enterprise."