Thursday, November 24, 2005

�Our trade with India can be trebled’

DEPUTY Prime Minister and minister of economic affairs of the Netherlands, Laurens Jan Brinkhorst, was recently in India with a big business delegation. In an interview with Vinay Pandey, he spoke about his country’s growing relationship with India. Excerpts:
What do you think of the India-Netherlands relationship?
We have a long historic relationship. But in economic terms, it has been an underdeveloped one. This is primarily because after Independence, India had chosen a policy of self-sufficiency. You concentrated more on internal development rather than connecting with the rest of the world. We greatly appreciate the fact that India is liberalising today. We also appreciate the enormity of task India has undertaken, to turn this big ship from an inward looking economy to an outward looking one. There is enormous potential in taking the relationship forward. That is why we are now here with the largest business delegation ever. Trade is one example. Only 0.5% of the Dutch external trade is with India. We can easily double or even triple it over the next five years.
What steps are needed to intensify the bilateral economic ties further?
The relationship can develop only if it is a partnership of equals. Therefore, we must start from the concept that a level-playing field is a must. There are still some elements of discrimination that have prevented the realisation of the full potential of the Dutch participation in Indian economy. Let me give you two specific examples. The first is the issue of how to have access to the financial markets. There is now minority shareholding possible in Indian banks and in Indian insurance companies. We also realise that we must have lower tariffs. By and large I think we have achieved very low level of tariffs and we hope that can be matched increasingly by India.
Energy is emerging as a binding constraint for India. What is the scope of Dutch involvement in this sector? What about the nuclear option?
The policy of the Netherlands has been to increasingly decouple economic growth from energy growth. If prices go up there is stimulus for investment in alternate energy. But in the case of a country like India that phase has not been reached yet because the poor population cannot be confronted with increasing energy prices. On the other hand, I think ultimately the answer cannot be to subsidise energy. I say this with some modesty because in most developing countries energy is subsidised. The way forward is not to increase subsidy every time but to do more in terms of energy saving. Indian economy is highly inefficient in terms of energy usage. We recognise that nuclear power is an option. I am certainly not against that option.
Is the Netherlands prepared to accommodate higher inflows of skilled Indian professionals?
We have always been outward looking. We are also open to importing knowledge from outside. You have some excellent universities and good knowledge in the IT field. We are in the process of making a law to facilitate the entry into the Netherlands of knowledge migrants. Our companies that are willing to work with Indian citizens can now do so through an accelerated process that imposes some obligations on them. If they fire the person so employed, the government will not be liable for social spending in respect of migrant who becomes unemployed.
Is there a meeting ground between the developed and the developing world at the WTO?
It is difficult to predict. But let me say two things. India should not focus just on agriculture. India is a large service economy and also has a reasonable manufacturing base. Increasingly India has interest in opening markets both for products as well as services outside. What you are actually interested is in market access and reducing export subsidies. LDCs already have total free access. Two, in the field of agriculture, EU has signed an agreement to phase out our existing export subsidies totally by 2013. If anything further will happen it will depend not only on what happens in India but also in America.

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