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PM cautions against non-tariff barriers

Last updated on: November 29, 2003 14:34 IST

Cautioning developed countries against imposing non-tariff barriers, Prime Minister Atal Bihari Vajpayee on Saturday said popular support for economic liberalisation will collapse if the developmental concerns of the poorer countries are not addressed.

Addressing the special plenary session of the 4th India-European Union Business Summit, Vajpayee made it clear that India would have to take into consideration the livelihood of millions of people while taking decisions on the sensitive agriculture issue at the World Trade Organisation.

Vajpayee also expressed concern over the mismatch in India's share in European Union's global trade which is under two per cent and said it should be corrected by a wider consciousness and better understanding of the larger picture of the India-EU partnership.

"We need to look carefully at the unfortunate reality that non-tariff barriers are gradually rising, even as tariffs are falling in response to globalisation," Vajpayee said, adding a range of issues from anti-dumping measures to manufacturing standards need to be looked at with a sense of proportion.

The prime minister also expressed concern over opposition in some quarters to business process outsourcing into India and said failure to allow free movement of persons would lead to outsourcing.

"The emotive arguments about the migration of jobs to countries like India have missed two basic points," he said, adding outsourcing, besides increasing competitiveness would also serve to bring in younger work force into Europe and America.

"The demographic profile of Europe and America necessarily means that these countries will need the induction of a younger work force from outside in the coming decades."

"If there is a more liberal regime of free movement of businessmen and professionals between India and Europe, this demand can be met within your countries," Vajpayee said.

In the absence of such a liberal regime, outsourcing is inevitable, he added.

Vajpayee said the realisation has still to take hold that with its rapidly growing economy, skilled human resources, expanding market and widening industrial and technological base, India can be a strong economic partner of the EU.

He said India attaches greater importance to trade and economic cooperation with the European Union, which is the largest trading and investment partner, an important source of technology in critical sectors and a major destination for India's service providers.

The prime minister observed that the post-Cold War global scenario has created a conducive atmosphere for a stronger India-EU partnership.

"We do not have any fundamental political disagreements, which could impede the dynamic growth of our economic cooperation," he said.

On the WTO, Vajpayee described the multilateral body as a chariot pulled by many horses.

"We have to recognise that unless the developmental concerns of the poorer countries of the world are taken into account, popular support for economic liberalisation will collapse in the developing countries. This could have disastrous consequences for our future discussions on the international trading regime," Vajpayee said.

Inviting investments from the European countries, Vajpayee said they would have attractive opportunities from the $25 billion Sagarmala project, which aims to build and upgrade a necklace of modern ports in India, while supporting international and coastal shipping along its peninsular coastline.

In infrastructure, he said the National Highway Development Project, to upgrade or build over 15,000 kms of roads linking the major metropolitan centres and rural regions, is well underway.

"Though India is still very much a developing country, we have put behind us the phase when developmental assistance was at the core of our transactions with the developed world," he said adding New Delhi was ready for a transition to more "mature" partnerships.

He said the India-EU interaction in trade requires some introspection and analysis if it were to double in the next five years from the somewhat modest level of euro 25 billion currently.

He said business and industry on both sides have made some recommendations.

The prime minister said there was a tremendous scope for enhancing cooperation in the area of technology.

"Technology is an area which should figure much more in the India-Europe discourse. Indian expertise in areas of information software technology is now reasonably well known and we hope to replicate our software revolution in bio-technology and management.

Vajpayee said the IITs and the Indian Institutes of Management have today become branded products, with international recognition and global demand.

"Yet, it is remarkable statistics that though nearly 200 of the Fortune-500 companies extensively use India as a research and development base, very few of these are from Europe," he said.

A C Muthiah, president, Federation of Indian Industry and Commerce said local enterprises, particularly the small and medium units in the developing world, are often unable to cope with the pressures of globalisation.

He said it is important to develop programmes that will smoothen the process of transition.

"Both India and EU have rich experience in nurturing small and medium enterprises and a regular interface on the SME front can yield immense benefits in the form of greater employment and spread of economic benefits."

Confederation of Indian Industry president Anand Mahindra said there was a self-belief, a new confidence and a strong optimism about the future of the Indian economy and industry.

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