INFOCUS | INDIA-CHINA | INTERVIEW
India, China together can transform the global economy An interview with Salil Bhandari, President of the PHD Chamber of Commerce and Industry ICC: Please tell our readers more about PHD Chamber of Commerce and Industry, its aims and objectives.
Bhandari: PHD Chamber of Commerce & Industry, established in 1905, is a proactive and dynamic multi-state apex organization working at the grassroot level and with strong national and international linkages. The Chamber acts as a catalyst in the promotion of industry, trade and entrepreneurship. PHD Chamber’s geographical span covers 10 states of Chhattisgarh, Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Madhya Pradesh, Punjab, Ra-
jasthan, Uttar Pradesh, Uttarakhand and the Union Territory of Chandigarh. The Chamber has identified six thrust areas namely, industrial development, infrastructure, housing, health, education and skilled development, agriculture and agri-business. Our motto is ‘In Community’s Life & Part of It’ and we contribute significantly towards the socio-economic development and capacity building in several fields. Our Chamber has a direct membership of over 1,600 corporate entities and serves more than 45,000 indirect members through its association members and secretarial affiliates.
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The membership covers trade and industry. We organize over 200 seminars, conferences and workshops every year in the region served by us. Through this process, we are able to provide policy inputs to government and a platform to discuss new ideas. We also provide networking opportunities with government officials, diplomats, leading names from all spheres of life and business peers. According to you what are the commonalities and divergences between the business environment in India and China?
Today, both the Asian economies are the fastest growing economies in the world. Being the most populous countries in the world, our consumer base serves as a huge potential market for the producers and manufacturers across the globe. Major Indian companies including Ranbaxy, Bharat Forge, Infosys, ICICI Bank and Reliance have laid their footprints in China. The Chinese counterparts including Huawei Technologies, ZTE and Sinosteel have set up their base in India. Both the countries have managed to withstand the aftermath of subprime crisis. China had provided a larger amount (around14% of GDP) to stimulate its economy whereas India managed to stimulate its economy with a significantly lesser amount (around 3%
of GDP). However, divergence from the GDP growth trend was almost the same in both the economies. In fact, China’s growth story is tilted towards a growth in exports and investments, whereas India’s growth pattern is mainly driven by domestic demand. During the last decade (2000), final consumption in India’s real GDP contributed 60% as compared with 43% in China. Two catalysts that have facilitated China’s growth are exports and incoming foreign direct investments. Chinese industry is the engine of growth and has created huge capacity and encouraged latest technology. Even the cost of capital is very low in China as compared to India. India’s savings and investment rates are behind China. There is an urgent need to augment the rate
of savings from their present level in India to generate funds for investment. An important factor is also the speed at which infrastructure has been created in China. However, India provides a conducive and secured environment to its business and investors in comparison to China. According to the latest World Bank report on “Doing Business in India”, availability of cheap credit, less time taking construction permits and improved tax payment structure are better in India as compared with China. What are the emerging trends that you observe would facilitate or impede trade and cultural relations between India and China?
Leaders from both the economies have been in touch through regular visits to each other’s countries. During the official visit of Chinese Premier Wen Jiabao to India in December 2010, six agreements on cultural exchange, green technologies, media, hydrological data, and banking were signed. The year 2011 was declared as the ‘Year of India-China exchange. Also, a bilateral trade target of USD 100 billion was set to be reached by 2015. On the FDI front, India received FDI of USD 65 million approximately from China between during 2000 to 2011. And there is still scope for investment. Even in the current scenario of rising global debts and unstable markets, it is the two Asian economies which are looked up to as the saviours of the global economy. Acknowledge
How do you perceive China? Is it a threat or an opportunity?
China is a threat to Indian small industry. Indian industry is facing growing competition from China, both internationally and also within. Indian SMEs are threatened by China’s low-cost products which can be imported. India must gear up to meet the challenges that China poses, both in domestic and international markets, and at the same time identify areas where we can take advantage of the large Chinese market so that the net effect on the Indian economy is largely India-China Chronicle |25|