The presence of Prime Minister Narendra Damodardas Modi as the chief guest to mark the 47th anniversary of our independence and the 23rd anniversary of the Republic is an important milestone in the long-standing friendship between our two nations. It also provides a unique opportunity to uplift our special and robust ties with India to another level of collaboration
India is today in a different league of nations. It is not only the largest democracy in the world but is also one of its oldest civilizations. Its universal philosophy, secular values, openness and tolerance as well as its spiritual teachings and its inspiring ethos play an increasing role in global outlook and culture. Indian professionals venturing abroad over the last decades have carved a reputation for excelling in disciplines requiring high numeracy skills and for innovativeness, savvy competence and management acumen in pointed sectors as diverse as the financial and Information and communications technology (ICT) services sectors, aerospace engineering, or medicine and as CEOs or top management cadres of leading companies abroad.
The economic reforms initiated as from 1991 to transform India into a free market economy resulted in India becoming one of the world’s fastest growing major economies and emerge as a BRICS country. This was achieved in spite of various crippling constraints hobbling higher performance such as road infrastructure, energy or red tape. It created a large urban middle class and significantly enhanced India’s geopolitical clout. Despite a difficult world market environment, the Indian economy grew, barring a growth rate of 5.1% in 2013, in a range of 6.5% to 9.2% during the 2005-2014 period. The growth rate in 2014 was 6.9 %. India is thus ranked as the third largest economy in terms of GDP Purchasing Power Parity basis by the IMF and the World Bank, after the United States and China.
There is a consensus among analysts that with continued infrastructural investments and reforms, India will emerge as an economic giant as it is endowed with favourable demographics, a high consumer demand fuelled by a large middle class, a resilient economy, an astute entrepreneurship and a stable democracy. With 356 million 10-24 year olds, India has the world’s largest youth population which represents a huge potential for the country. The attractiveness of the Indian economy for investors has been buoyed by Prime Minister (PM) Narendra Modi’s successful track record during his 12-year tenure as Chief Minister of the state of Gujarat, his commitment to a reform agenda, charismatic persona and deft leadership.
India is being courted by all the leaders of the major economies of the world for partnerships and a boost in economic and trade exchanges whereas India is seeking a quantum increase in Foreign Direct Investments. The leaders of China, Russia, Australia and the United States have thus all come to India on State visits since PM Modi came to power in May 2014. Prime Minister Modi keen on knitting stronger commercial, economic and bilateral ties between India and the world has already been on State visits to Brazil, Japan, the United States, Australia as well as Bhutan, Nepal, Myanmar and Fiji. He is scheduled to be on State visits to France, Germany, Canada, China and Russia in the next few months.
The 2015-16 budget measures announced by the Indian Minister of Finance, Arun Jaitley on 28 February have addressed some of the major logjams besetting the Indian economy. The budget measures inter alia rationalize laws and include numerous policy and tax amendments such as reducing corporate tax on domestic companies from 30% to 25% over a period of four years.
The object of these measures is to create an investment friendly environment to encourage local economic operators to put private domestic capital to work as well as attract Foreign Direct Investments (FDI) in India. The Damocles sword of the General Anti-Avoidance Rule (GAAR) which can review any transactions suspected of tax evasion for sanction has been deferred for two years and will only apply prospectively.
The budget measures have therefore boosted business confidence and it is expected that once the enabling reform legislations are enacted, investors will respond positively to PM Modi’s ‘Make in India’ initiative. The Minister of Finance has forecast that growth would accelerate to 8-8.5% in the 2015-16 fiscal year starting in April up from 7.4 % in 2014-15.
Welcome Prime Minister
The presence of Prime Minister Narendra Damodardas Modi as the chief guest to mark the 47th anniversary of our independence and the 23rd anniversary of the Republic is an important milestone in the long-standing friendship between our two nations. It also provides a unique opportunity to uplift our special and robust ties with India to another level of collaboration. What is required is to fashion a game changing partnership.
His presence on our soil on our Independence Day carries with him the potent message of his unwavering commitment of service to the people when he humbly stated after his elections last May that he was the No.1 mazdoor (hired labourer/worker) of the nation.
The economies of India and China have grown rapidly over the past couple of decades, and it is widely accepted that these two emerging giants will transform the global economy in numerous ways over the coming decades. As a consequence, the United States and the major countries of the European Union such as Germany, France and the UK are strengthening their trade and economic ties with these two key players of the world economy. The growing weight of these two economies is transforming the international pattern of trade and economic ties and reshaping the geopolitical landscape of the world. The world is materially changing and this has to be taken on board as we recast our marketing and growth strategies.
In the light of the inability of the European Union to conjure the international financial crisis despite various bailout packages and continued austerity measures, it would be judicious especially in the context of a weak Euro to temper our Euro centric sales strategies with a diversification of our markets
India’s growth would continue and increase in the coming decade if economic reforms continue and are expanded and large-scale structural changes are undertaken to support growth. It must be highlighted that India’s growth did not follow a standard model of development but was anchored on its forte as a provider and exporter of IT services and knowledge intensive services in the Information and communication technology (ICT) and financial services sectors. India has emerged as the back office of global corporations and a leading provider of knowledge based services.
Such a high skilled based vector of growth has been possible because India has the largest pool of quality engineers trained in the internationally renowned institutions like the Indian Institutes of Technology (IIT) and Information Technology (IIIT) or the National Institutes of Technology (NIT), etc., as well as an enormous source of quality managers graduated from the Indian Institutes of Management (IIM), Chartered Accountants, bankers and scientists. This success has also been possible because these skilled professionals were smart, creative and innovative to continuously upgrade the services offered whilst maintaining their competitive edge. India can adapt quickly to technological changes, as evidenced by India’s telecommunications, ICT and mobile phone and apps revolution.
The bilateral discussions will focus on the various facets of our long-standing cooperation agreements including the ongoing dialogue on the Double Tax Avoidance Agreement (DTAA). There is now an urgent need to significantly hike the tenor, scope and ambition of our bilateral ties in a manner that aims at ironing out our sectoral constraints and provides an impetus to growth. A new game changing partnership with India should therefore necessarily include close collaboration and induction of the required expertise to move the ICT and the financial services sectors up the value chain. A similar multi-disciplinary scientific and technical collaboration is needed to help Mauritius assure a judicious, environment friendly and sustainable management of the diverse resources of the Ocean economy. This is another area of collaboration which would uplift the partnership with India through a knowledge intensive content.
The partnership dialogue with India must also revisit GOPIO to turn it into a more vibrant platform of cultural, business, academic, professional and people to people interface among the millions who form the Indian Diaspora to enable them to connect, bond and build on their rich common heritage as immigrants.
A rapidly growing India also offers multiple opportunities to Mauritius. For example, India has emerged as the fastest growing market for outbound tourists. The number of Indians travelling overseas on holidays is set to rise from 15 million in 2013 to 50 million in 2020. The Tourism industry should beef up its efforts accordingly to tap this market especially as the airfare, hence the tourist travel budget, is significantly lower than the airfare from Europe.
Although more and more multinational Indian companies who are expanding their global footprints are quoted on foreign stock exchanges like NASDAQ, the investors from India have so far been a mixed bag. It would therefore be apt if the Indian private sector institutions such as the Confederation of Indian Industry were to assist in prospecting suitable investors in the various new pillars of our economy.
As is the case in India, a knowledge intensive services sector can be a potent vector of growth provided it is manned by suitably high skilled and trained personnel. The higher the quality of the services provided, the higher the leap up the value chain. As India has been among the most successful high-end operators in this sector, their expert guidance and collaboration would be vital to ground the sector on sound bases. Apart from fuelling growth, such a venture would also help harness the technical skills of young graduates and other suitably qualified persons as well as provide gainful employment to them.
Together we can.
* Published in print edition on 13 March 2015