Brussels - 04-12-2003 Organised by Global Organisation of People of Indian Origin (GOPIO - Belgium) In Association with The Embassy of India Brussels

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I will try to cover most of these questions in my submissions.

India’s investment environment today is one of the best that you can think of for investments abroad. It offers value for money. India of today is one of the fastest growing economies. We are one of the very few countries in the world that have grown without a break in the last ten years at a sustained pace of over 5-6 %. In the current year we are expected to grow at 7%. Despite the global slow down, Indian exports had gone up by 19% during the year 2002-2003 and the growth trend is continuing, though not in the exports to EU. This pace is bound to quicken with the second- generation reforms that are being pursued ever more energetically. The domestic demand is expected to double over the ten-year period from 1998 to 2007. The number of households with “high income” is expected to increase by 60% in the next four years to 44 million households. India is one of the largest emerging markets of about 2.4 trillion dollars per year.

Look at changes in this market. 2 million mobile phones are being absorbed per month. Inflation is at a record low of 4%. Interest rates are at 6%, at their lowest in the last thirty years. Foreign exchange reserves are over at US $ 94 billion. Given our present comfortable foreign exchange reserves, the Government has made premature repayment of US$ 3 billion of ‘high-cost’ loans to World Bank and Asian Development Bank. After having been a borrower in the past, India has become a net creditor to IMF since July this year. We have the distinction of being one of the few developing countries that have never defaulted on their foreign debt payment obligations. India’s external debt to GDP ratio in 2003 is only about 20%. The total external debt is around US$ 105 billion and it has a very insignificant short debt component of less than 20%, which as we know, can have a destabilizing effect as had happened during the ASEAN crisis in 1997. Isn’t it a matter of pride that Indian elephant remained undisturbed even when ASEAN tigers got mauled during the 1997-1998 melt down in East Asia. There is, therefore, absolutely no sovereign risk in investments in India at all. Our paperless and computer-driven National Stock Exchange is the third largest in the world in terms of annual transactions. From a food shortage country, we have become an exporter and donor of food grains. The World Bank has rated India as the 4th largest economy in the world on the basis of Purchasing Power Parity.

All major international agencies and investment analysts have underscored India’s attractiveness as FDI destination with an assured potential for attractive returns. Goldman Sachs has predicted that among the four BRIC economies (Brazil, Russia, India and China) only India has the potential to have growth rates significantly above 3% by 2050. The BRIC economies are estimated to be larger than G6 in less than 40 years. India has been predicted to grow at a rate higher than 5% during the next 30 years and close to 5% as late as 2050. As per this report, India will overtake Italy by around 2017, Germany by around 2027 and Japan by 2032. While JBIC Survey 2002 ranks India as the 6th most promising destination for FDI, Deutsche Bank report 2002 predicts a quantum jump in FDI flow to India. India ranks 6th in the A.T. Kearney Business Confidence Index 2003. UNCTAD, JETRO and Economist Intelligence Unit also have similar good words to say for India. According to the Far Eastern Economic Review, India is going to remain a major destination for foreign venture capital funds. Global Competitiveness Report of the World Economic Forum for the year 2002-2003 has ranked India at Number 1 and Number 2 for its foreign technology-licensing regime and for the availability of scientists and engineers.

Many of you may be surprised to know that the degree of corporate profits in Indian economic environment today is much higher in comparison to some of the other countries in Asia who are often cited as examples of large FDI destinations. If someone wants quick returns without bothering about its quality, one is welcome to go somewhere else. However, if one wants high but sustained regular returns over a long term, India is the place for investment. Whereas China and Thailand are estimated to offer on average investment returns in the range of 14.25% and 13.3% respectively, India’s record in this regard is enviable. The rate of return in India is estimated an average as high as 19.33%. In fact an earlier US investment survey by Interlink and Rank Xerox had estimated ROR of 21% in India, 18% in South East Asia and 14% in US/EU. Some of the successful investors often deliberately appear to paint a somewhat pessimistic picture about India to discourage competitors from entering this lucrative Indian market.

The comfort level of the European companies who are already operating in India is known to be very high. While 250 of the Fortune 500 companies are our clients, about 100 of them in the US have already located themselves in India. It is the EU companies that are yet to take a plunge. While our all villages running into several thousands may not be able to boast of sustained and problem-free infrastructure, our software/hardware technology parks, export processing zones and special economic zones offer world-class infrastructure that is second to none. In fact the investors and their executives in such locations, are likely to have a better industrial and civil infrastructure leading to a higher standard of living and quality of life vis-a vis their own home country.