ADDRESS BY SHRI K.R. NARAYANAN, VICE PRESIDENT OF INDIA AT THE ANNUAL GENERAL MEETING OF THE INDO-GERMAN CHAMBER OF COMMERCE

BOMBAY, NOVEMBER 6, 1992

Mr. Kroll, Ambassador Dr. Wieck and Friends,..

I am happy to be in your midst today on the occasion of the 36th Annual General Meeting of the Indo-German Chamber of Commerce.

I understand that this is the oldest and the largest bi-national chamber of commerce in India, having been established in 1956 and today having a steady membership of more than 5000 companies in both the countries. The members of the Chamber are its basic strength, and I congratulate you on your successful contributions to the promotion of trade and collaboration between India and Germany.

Your Annual General Meeting is being held at an appropriate time when Prime Minister Shri Narasimha Rao is opening up the India economy and globalizing its market to gain its rightful position in international trade and economic relations. The economic regulations and restriction for directing the planned development of earlier years have served their purpose. Indeed the role of the State in that early period of development has been crucial for the growth of our economy and the building up of a fairly advanced industrial and technological infrastructure. It promoted not only the public sector but helped in the growth of the private sector also.

In the early 1960’s there was a debate among the economic elite in the United States as to whether India should be given aid on accounts of its policy of promoting the public sector. In an important report which swayed the mind of President Kennedy, the Harvard Professors, Millikan and Rostow wrote as follows: “There are situations in which development must already be firmly established before it is reasonable to expect private investment to take primary initiative, for pushing it forward. In such situations insisting that investments must be wholly or largely privately administered from the start may prevent pre-conditions for private investment being established. “ I should like to say that the India economy was never a command economy of the Soviet or the early Chinese type. It was a mixed economy, as almost all economies, indluding the capitalist economies, are today. The present economic liberalization in India, is a highly accelerated evolutionary process helped by the current world environment. It is structurally required for the efficient functioning of the economy and for its further development. It is for this objective reason that it is an irreversal process. Hence it is now possible for India and foreign industrialists and businessmen to plan with confidence their investment in Indian a long-term basis. I would therefore call upon German businessmen and industrialist to explore the new possibilities thrown up by the present liberalisation policies for further promotion of their business relations with India..

India and Germany have a rich and long-standing tradition of co-operation in all fields, cultural educational and scientific as well as trade and economic collaboration. Max Mueller, Paul Doussen and other Indologists are household names familiar to everyone in India, and their pioneering works on India culture are read and admired even today. Many colleges and other educational institutions in India owe their existence to the selfless services rendered by the Germany educationlists and missionaries of the last century. The relations between the to countries have always been marked by mutual faith and respect for each other. Poet Heine once said: “The dry land belongs to the French and Russians, the sea to the British, but we are undisputed leaders in the empire of dreams.” Much has changed since then with regard to dry land and the sea, but in the empire of dreams, philosophy and metaphysics, there is historic affinity between out two countries which gives a depth to our relationship..

While Indo-German trading relations can be traced back to the 16th century, a tradition to which your President referred to in his address, they can be said to have gathered momentum only from the last century onwards, with the process speeding up in our own times. It may come as a surprise to many of you that the balance of trade was almost always in favour of India until India gained independence in 1947 and launched its amitious plans for industrialization. The imports of capital goods required for the new industries led to a continuing trade deficit thereafter, which persists to this day. However, I am glad to not that this deficit is shrinking due to the growing contribution of our exporting companies. I understand that the majority of members of the Chambers are exporters, and that export promotion is one of the primary tasks of the Chamber, and I thank you all for your achievements..

The trade volumes have grown dramatically since Independence in 1947. The progress of India towards planned industrialisation was helped greatly by the readiness of Germany for technology transfer and development assistance on favourable terms. Germany today is the second largest source of technology for India. Besides Rourkela and Neyveli Lignite and other officially aided projects, as many as 900 collaboration agreements and 192 joint centures are operating today, as per your Chamber’s latest survey. They are abundant evidence of the private sector initiative in Indo-German co-operation..

The Volume of Indo-German trade has grown tremendously in recent years. It was DM 5 billion in 1991, and for the first half of this year, it has already crossed DM 3 billion. Not only the Volume, but also the composition of Indo-German trade has changed considerably over the years. Trade flows being the forerunner of investment flows, I welcome this upward trend in trade, and hope that the much needed boost to capital inflows would also be visible shortly..

I would like to reiterate the advice given by your President in his address to German industry: Do not be prejudiced by India’s current transitory difficulties in judging the country’s true economic potential. Take a long term view of what India offer, a large market for every conceivable product, qualified manpower, freedom of business and guarantee of equal treatment for all, a stable democracy and a high level of general education. We are aware of the shortcomings like infrastructure facilities of power, transport and communications. We appeal to the private sector to come forward with contributions to the creation of new infrastructure facilities and invite the German industry to support us in this task. German industry enjoys a very high reputation in India and is well known for its technological skills..

Yours President Mr. Kroll has quoted me on my view, that there can be no lasting benefits from any economic liberalisation so long as there is deprivation and lack of social justice in the country. You cannot build islands of affluence in the midst of mass poverty and unemployment. The benefits of the present economic policies must reach the people as a whole. Therefore there are certain compulsions of social justice which characterise our policies and it is necessary for our German friends to understand the logic of these compulsions. We are involved not only in economic but administrative reforms affecting the functioning of our bureaucracy for facilitating investment and trade. We are also trying earnestly to introduce new management techniques and a new work ethos in the industry for increasing productivity and improving the quality of our products. This change in work ethos, I believe, can be helped to some extent through joint ventures with the developed countries, since the joint ventures bring along with them not only know-how but also working patterns and procedures prevailing in those countries. Foreign collaborations should be able to transfer technology and also the work ethos in which that technology was developed...        The forthcoming Indian Engineering Trade Fair in February 1992, in which large scale participation by German companies is expected, may prove to be a good opportunity to conclude some more joint venture proposals. Your Chamber should be in a position to assist the interested parties and ensure quick implementation of the proposals...

Another activity of the Chamber may also be looked upon as a contribution to the creation of a new work ethos, and that is the scheme to train young commerce graduates for over two years based on the dual system of training in Germany. This training system deserves to be commended for its work...

This annual meeting of yours has given me the opportunity to acquaint myself with the range of activities, the truly bi-national character and the practice-oriented approach of your Chamber. Let me conclude by placing on record my sincere appreciation for the contribution of the Indo-German Chamber of Commerce for better understanding and growing economic co-operation between our two nations which I believe, is integral to India’s larger co-operation with the European community. I wish you all success in the years to come.

Thank you.