NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » India to enhance economic ties with East Europe

India to enhance economic ties with East Europe

December 11, 2002 15:11 IST

India on Wednesday asked for enhanced economic ties with Central and East European countries, with Minister of State for Commerce and Industry Rajiv Pratap Rudy announcing that the Exim Bank would provide lines of credit for financing exports to the region with an initial corpus of $100 million.

Addressing a seminar 'Doing business with East Europe,' organised by FICCI, Rudy said India's trade with the Central and Eastern European countries had plummeted since the fall of communism to a low level -- from $777 million in 1990-91 to $390 million in 1993-94.

"There was a brief upswing of trade during 1995-96 (646 million dollars), which, however, continuously declined till 2000-01, with a marginal improvement in the last fiscal," he said.

The minister said there was an urgent need to improve the figures with most of the East European countries slated to become members of the European Union in the coming years.

"By establishing our foot-hold in these markets, we can possibly target a much larger, integrated market with whom we have most of our business transactions," he said.

Among factors which had led to the decline in trade, he listed collapse of the erstwhile well-established trade arrangement, dismantling of rupee payment system, severe liquidity constraints and internal socio-economic disarray in the region due to rapid shift from command and controlled economy to liberal and market economy.

"During the Comecon period, trade between India and the East European countries was done through central clearing account where the purchase and the sale of quantities were ordered in bulk through the intervention of the respective governments."

"However, now most of the state enterprises in these countries have been privatised and smaller and medium level firms are operating on a comparative free market basis, shifting the requirement from bulk sale/purchase to break-bulk," he said.

He said the East European buyers preferred to purchase and sell smaller quantities from neighbouring countries rather than waiting for goods to arrive for quick rotation of capital.

"Earlier, the presence of Indian businessmen in the East European region did not hamper the trade transaction as all economic decisions were centralised."

"But now there is a need for Indian businessmen to improve their presence and visibility... to achieve which we suggest that a group of interested businessmen/company representatives in the fields like textiles, pharmaceutical products, leather and leather goods, coffee/tea, readymade garments, handicrafts, among others, be formed and interact directly with prospective buyers in these countries," he said.