In recent years, there has been a substantive growth in our economic and commercial relations. In spite of the global economic downturn, bilateral trade has seen a substantial increase and has reached approximately $1.5 billion in 2013, which is an encouraging development. However, I am of the firm opinion, that this does not do justice to the true potential for economic and trade co-operation that exists between our two nations.
India has emerged as one of the largest global economies and the resilience of our economy is evident from the fact that the impact of the global financial crisis has been far less severe in India than other countries. The strong growth performance that marked our economy in the past decade, when we grew at an average rate of 7.6 per cent per year, has generated keen investor interest in India. Though our gross domestic product (GDP) growth during the last two years at sub-five per cent was rather subdued, it was still higher than most major economies, barring China. Our economy grew at 5.7 per cent during the first quarter of 2014-15. Our external sector has strengthened; the exchange rate has stabilised; fiscal consolidation measures have improved our position; price levels have come down; figures from recent months show that the manufacturing sector is in the nascent stages of a comeback; food grains production reached record levels last year to help the agriculture sector grow at a robust 4.7 per cent in 2013-14. With measures aimed at stimulating greater investor interest, strengthening macro-economic fundamentals and rejuvenating the infrastructure sector, the Indian economy is poised to once again achieve a 7-8 per cent rate of growth.
The foreign direct investment (FDI) regime in India has been progressively liberalised, with restrictions on foreign investments gradually being removed and procedures being simplified. Currently, our FDI policy is widely seen to be among the most liberal in the emerging economies, allowing up to 100 per cent FDI under the automatic route in several of our sectors. We have also recently enhanced the FDI cap in crucial sectors like insurance and defence manufacturing and permitted 100 per cent FDI in railways infrastructure. This is expected to act as a further boost for external investors. I am, therefore, slightly surprised that FDI equity inflows from Finland into India since April, 2000 have only been $288 million, representing only 0.13 per cent of the total FDI equity inflows of $228 billion into our country during this period. I am confident that greater B2B interaction will create better awareness of the vast economic opportunities that lie within our economy.
We have renewed our thrust on the manufacturing sector in India. In 2011 we unveiled a policy that envisaged increasing the contribution of manufacturing to our GDP from 15 per cent currently to 25 per cent by 2022. The Indian government is committed to a business-friendly environment - impediment free, predictable, facilitatory and transparent. To that end, India has embarked on an ambitious "Make in India" programme to make the country an investor-friendly destination by setting up single window clearances, e-business portals and investor facilitation cells.
In the next few years, we envisage a spend of a trillion dollars on infrastructure. To facilitate greater investment in infrastructure, we have set up facilities and schemes such as industrial corridors, the industrial infrastructure up-gradation scheme, national investment and manufacturing zones, industrial clusters and smart cities. Development of infrastructure will not only propel economic growth in our country but shall also enable foreign companies that invest in India to participate in and partake the benefits of our growth.
Both our countries signed the Agreement on Economic Cooperation in 2010, which shows the importance we attach to expanding bilateral co-operation and partnership. A number of Indian information technology (IT) firms are executing contracts in Finland. Over 130 Finnish companies are operating in India in various sectors including power equipment, heavy machinery, telecommunications, IT, water treatment, bio-fuel, education, environment, renewable energy and manufacturing sector.
Finland's innovation system is one of the best in the world. Finland has developed sophisticated technologies in areas such as communications and information technology, energy, shipbuilding, manufacturing, biotechnology, environment, healthcare and infrastructure services. There is, accordingly, ample scope for collaboration in areas of innovation, clean technologies and waste management. The Government of India is very keen to encourage the companies of both countries to explore opportunities of collaboration in areas hitherto unexplored. Finland's "India Action Plan" launched in April 2013 is a testimony of Finland's initiative for expanding economic cooperation with India. Opening of a Fin-Node Centre in Delhi in September 2011 is another indication of the importance the Government of Finland attaches to bilateral economic relations. Tourism is another area of immense potential in our bilateral relations. You would be happy to know that tourists from Finland can obtain visas on arrival at Indian airports.
The higher education sector in India is also expanding at a fast clip and many new institutions have been established. We now need to focus on fundamental research in science and technology to help us manage better, issues such as managing and mitigating climate change, ensuring food and drinking water security for our people, and finding sustainable energy sources.
In modern civilisations, knowledge is power. I am aware that the Finnish education system is one of the best in the world and scores very highly in international ratings. India and Finland need to collaborate intensively in the educational sector so as to add to the diversity of our campuses and to build capacity. I am happy that during this visit several MoUs and agreements have been formalised between Indian educational institutions and Finnish universities.
A growing India offers opportunities across sectors in an investor friendly environment for Finnish companies. India is keen to further invigorate our bilateral engagement under the newly formed government which has chosen infrastructure and manufacturing as two key focus areas.
Edited excerpts from the speech by President Pranab Mukherjee during the business meeting at Finpro in Helsinki on October 16, 2014
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
