KEYNOTE ADDRESS BY THE PRIME MINISTER
AT THE JOINT MEETING
OF INDIAN AND RUSSIAN BUSINESSPERSONS
The Prime Minister
Shri Atal Bihari Vajpayee delivered the keynote address at the
joint meeting of Indian and Russian businesspersons, at Moscow
today.
Following is the full text of
the address of the Prime Minister on the occasion:
"This is a landmark
event in the history of India-Russia commercial relations. India
and Russia have a time-tested relationship, which is marked by
close political understanding, strategic convergences, defence
cooperation and cultural affinities. There has also always been
a strong economic dimension to our relationship, but its content
has largely been determined by government facilitated trade and
investments by our State-owned enterprises.
Today, it is
a pleasure to see that nearly 100 senior Indian businesspersons
have travelled to Moscow for my visit, and have received such
an enthusiastic response from Russian business and industry. It
signals the encouraging prospect of a new vigour in India-Russia
trade and investment relations, which would be driven by the private
business and industry of the two countries.
The wider macro-economic
picture is very encouraging. Both India and Russia are dynamic
economies with tremendous potential for growth. India is a large
and growing market, with a large pool of excellent human resources
and a favourable demographic profile. Russia has enormous natural
resources as well as acknowledged scientific and technological
excellence. Both have made impressive progress with structural
reforms in recent years, blessed with a broad policy consensus
and inspired by the desire to occupy their rightful places in
the global economy.
The facts speak
for themselves. During a period of major economic slow down around
most of the globe, India and Russia have continued to grow. In
fact, by the yardstick of average GDP growth during the last four
years, both countries are among the top ten performers in the
world. Equally importantly, the growth in both our countries has
been broad-based, covering both the domestic and external fronts.
Both countries are today in the forefront of developing and introducing
cutting edge technologies. Our advances in the knowledge-based
industries have transformed our economic landscapes and developed
new capabilities and synergies. We have both achieved expertise
and even dominance in certain areas of technology.
The new dynamism
in India’s economy is receiving more and more attention around
the world. In the last ten years, GDP doubled; and we hope to
redouble it in less than a decade. India is today the fourth largest
economy in the world on purchasing power parity. Our external
reserves are over US$ 90 billion and are increasing by a billion
dollars every two weeks. We are rapidly reducing our external
debts, even by repaying them before they are due. This year alone
we have already pre-paid over 3 billion dollars. Inflation is
low and interest rates are on a declining curve. There is a strong
increase in business confidence in recent months. Foreign trade
is growing at double digit rates.
The world is also
beginning to recognise the quiet revolution in the integration
of the Indian economy into the global mainstream. Indian enterprises
are achieving global scales in quality and output. India has become
a production base and export hub for a range of products, from
agricultural goods to automobile components to high-end services.
Indian firms are now part of global production chains – importing
sub-assemblies, adding value to them and re-exporting them. Corporations
from all over the world are establishing themselves in India for
manufacturing and services. Taking advantage of its pool of high-quality
scientific talent, they have also established large R&D centres
in India.
India is one of only
three countries to have indigenously built super computers and
one of six countries in the world that build and launch satellites.
A few months ago, we launched a satellite into geo-stationary
orbit. We plan to send a spacecraft to the moon in the next five
years.
In many areas
of this Indian success story, there is a strong Russian connection.
Particularly in the early decades of our independence, we received
the most valuable assistance from the Soviet Union in the establishment
of our infrastructure and heavy industries. Both in our space
programme and in the peaceful applications of nuclear energy,
India owes a strong debt of gratitude to Russian scientific and
technological assistance. Our close collaboration in scientific
and technological research and development has extended to diverse
disciplines. You would be amazed at how many Indian scientists
and engineers in India, specially of the older generation, can
speak or understand Russian!
This longstanding,
robust and multifaceted bilateral engagement is the firm base
on which we seek to build a more modern economic edifice. We need
a concerted joint effort to invigorate the traditional economic
relationship and to integrate it with market determined forces.
Our bilateral
trade has been largely conducted under the framework of a rupee-rouble
agreement from Soviet times, and a subsequent credit repayment
agreement. While this has been a steady relationship, it has also
been limited in its flexibility. Our existing annual trade level
of under $ 1.5 billion does not correspond to the transformations
in our economies.
Our two Governments
are acutely conscious of this anomaly. When President Putin visited
India last year, we signed a Joint Declaration, which spells out
our shared vision for a new dynamism in the India-Russia economic
partnership. We recognized that there is huge untapped potential,
not only for an exponential growth of bilateral trade and investment,
but also for jointly exploring other markets through pooling of
resources. With our vast resource base and intellectual capital,
Russia and India should jointly explore avenues for generating
and meeting demand on a regional and global basis.
Business and
industry should take this up in their own commercial interest.
A number of core sectors can be easily identified for focused
cooperation. They include machinery and equipment, IT and telecom,
automobile components, gems and jewellery, food processing, tourism,
pharmaceuticals and energy.
Information Technology
is a glaring example of unutilized bilateral opportunity. India
is today one of the world leaders in IT and IT enabled services.
Our annual exports in this sector are nearly US $ 10 billion –
most of it to Europe and America. Russia has a large and sophisticated
IT market, and yet India’s IT exports to Russia are negligible.
Quite often, Russia has been importing these products from Europe,
which have been sourced from India at much lower cost. The middleman
benefits, the consumer loses.
India is today undergoing
a qualitative transformation in its infrastructure. We have launched
an ambitious project which involves building or upgrading about
15,000 km of highways, which would link our major metropolitan
centres and provide improved connectivity to our rural areas.
We are upgrading our ports facilities; modernizing our airports
and building new metros. We are improving the efficiency of our
power generation, transmission and distribution. In the last few
months, India has been adding nearly 2 million mobile telephone
connections every month.
Russian companies,
which have both the expertise and the spare capacity in these
industries, have not yet fully grasped the opportunities for contracts
in various infrastructure projects in India.
Energy cooperation
is another key area of interest. Russia has emerged as one of
the leading suppliers of energy and India is one of the largest
and fastest growing markets for energy. Indian companies are keen
to invest in energy projects covering upstream, midstream and
downstream areas. India’s investment of about US $ 1.5 billion
in the Sakhalin Oilfield illustrates this. Our companies have
also significant investments in the oil and gas sector in Sudan
and Vietnam. There is an India-Russia synergy for projects within
our countries and in third countries. Our business communities
should take the initiative for an Energy Forum between India and
Russia.
Connectivity
and transport linkages are crucial inputs to trade and economic
collaboration. The new multi-mode North South transport corridor,
which links India to Russia through Iran and Central Asia, provides
an important cargo route between the two countries. Goods are
already moving from India to Russia on this route. Russian exporters
should also explore this route, so that it becomes more economically
viable. It will also provide the incentive for upgrading infrastructural
facilities on this route.
A sector of great
potential in India-Russia collaboration, and one which has been
somewhat neglected, is small and medium enterprises. In India,
this sector which has contributed significantly to employment,
development and exports. Small enterprises in India extend from
relatively low-tech, labour intensive industries to high-tech
areas, including Information Technology. Today, India’s pharmaceuticals
industry has achieved national self-reliance with high quality
medicines at affordable prices. This achievement was mainly due
to our small pharmaceuticals enterprises.
We know that Russia
is now devoting attention to the development of small and medium
enterprises. I was happy to learn that the Russian Public Organization
of Small and Medium Size Enterprises has just concluded an MOU
with our Federation of Indian Chambers of Commerce and Industry
to explore synergies in this vital sector. Our cooperation can
span a wide spectrum, such as training, exchange of experts, management,
supply of machinery and equipment and even turnkey execution of
projects.
Mutual investment
flows is an important pillar of a vibrant economic partnership.
Both our countries are attracting increasing flows of foreign
investment. Our firms are also looking for investments abroad.
It is time that Indian and Russian firms availed of more opportunities
in each other’s country. Our major bilateral investments –the
Sakhalin Oilfield in Russia and the Kudankulam Nuclear Power Plant
in India - illustrate the benefits of mutual collaboration. We
need to broad-base investment flows. This also needs closer links
between our banks and financial institutions. The establishment
of commercial branches of banks in each other’s countries should
be a priority goal.
India-Russia economic
cooperation has extended to multilateral forums. Both our countries
support the strengthening of multilateral institutions to sustain
a balanced and equitable global economic order responsive to the
needs of our countries. We have actively supported Russia’s accession
to the WTO, not only in the spirit of our strategic partnership
but also in the firm belief that Russia’s membership would bring
balance and strength to the WTO. India and Russia can play an
important role, in concert with other major emerging markets,
in encouraging the WTO to operate for the common benefit of all
its member countries.
India and Russia
have developed strong bonds of friendship and cooperation over
many decades. Our shared political perspectives, convergences
of strategic interest and our cultural affinities have been the
foundation stones of our strategic partnership. A dynamic and
multifaceted economic partnership provides a secure underpinning
to the other elements of this relationship. It is in the hands
of the business community to strengthen this under-pinning. There
are objective factors propelling you towards this objective."