SWEDISH SOUTH ASIAN STUDIES NETWORK

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Forum Asia: High time for business in India:

Report by Staffan Lindberg

The forum was organised on 12 February 2003 at Rosenbad Conference centre, Stockholm, by the Ministry for Foreign Affairs and with speakers from the government, the business community, and universities. It was lead by Ms. Eva Walder-Brundin, head of the Asia-Pacific unit at the Ministry. The seminar was attended by about 150 persons from business companies, Sida, ministries, universities and media.

Background – Relations to South Asia and India

The seminar is part of a new Swedish strategy towards India, first formulated within the broader framework of the Government Report “Future with Asia”, which was released in 1998. In the report it is emphasised that Sweden should intensify its interaction with South Asia, now emerging as one of the most populated and economically important regions of the world. It is meant to be a broad interaction from trade and business exchange, development co-operation, to academic and cultural exchange.

A number of new initiatives have now been taken:

– SASNET – the Swedish South Asian Studies Network was started in 2001 by Sida SAREC and Lund University and is now developing a broad range of educational and scientific activities related to South Asia and India.
– A new strategy for development co-operation will be presented by Sida in April this year. The overall emphasis will be on poverty reduction.
– The Swedish Institute is promoting a visitors’ programme in co-operation with the Swedish International Development Cooperation Agency, Sida.
– A Swedish-Indian Translation Project, SAMBANDH, has been going on since 1996 and is supported by Sida and the Swedish Institute. More information on the Indian Library.

Time for business!

An immediate background for the current increase in organised business relations, however, is the initiative taken by the Indian ambassador to Sweden, Ms. Chitra Narayanan, who organised a meeting between Indian and Swedish businessmen in Stockholm on 7 October 2002 (Read our report from the meeting).
The meeting was very open and showed a mutual interest in increased exchanges from both sides. A Swedish India Business Council under formation was announced during this meeting.

Current Swedish government activities to promote Swedish business and culture in India include:

‡ A Swedish food festival, horse polo tournament, and fashion show in New Delhi in February 2003
‡ A Swedish government-business delegation lead by Mr. Leif Pagrotsky is visiting New Delhi and Bangalore on 1–3 April 2003
‡ On 1 – 2 April 2003, there will be a government commission meeting between India and Sweden in New Delhi dealing with economical, technical, and scientific co-operation.
‡ On 2-4 April 2003, there will be ‘Promote Sweden Days’ in Bangalore.
‡ On 15-17 April, there will be Biotech 2003 fair in Bangalore with Swedish experts and companies.
‡ In May 2003, Swedish construction companies will visit the city of Dehra Dun and its administration.
‡ On 1-5 September 2003, there will be ‘Promote Sweden Days’ in Pune, Maharashtra, with films by Ingmar Bergman, seminars on Solid Materials Processing and Road Safety, and a special issue of the magazine ‘Architecture and Design’ on Sweden.

Swedish government agencies active in this programme are, besides the ministries for Foreign Affair and of Industry, Employment and Communications, the Invest in Sweden Agency (ISA), the Export Council (ER), the Swedish Trade Council, the Import Council (IR), the Export Credit Council (EKN).

ISA is planning to establish an office in India and is now undertaking a feasibility study. Start South/Sida is involved in two projects on IT and active coal production. The Swedish Trade and Import Council is interacting with the India-Sweden Subcommittee of Maharashtra Chamber of Commerce. Finally, the Swedish Export Credit Council has rated India fairly positively with grade 3 on a scale with 7 values, 1 being the most positive.

Seminar 12 February: Prospects for increased trade and business exchange

The 12 February seminar presented a number of aspects relevant to increased economic interaction between Sweden and India. The following persons spoke at the seminar:

Sven-Eric Söder, State Secretary, Ministry of Industry, Employment and Communications: The Swedish Government assessment of and thrust for increased trade with India.
Ingolf Kiesow, Ministry of Foreign Affairs, Swedish Defence Research Institute: Indian politics and the Kashmir conflict.
Ulf Hjalmarson, NCC: How to do business in India, some experiences.
Bo Landin, Sweden India Business Council: Information about the Sweden India Business Council.
Staffan Lindberg, SASNET, Lund University: Economics, politics and cultural codes: What does Hindu nationalism mean for India’s development?
Hans Jansson, the Baltic Business School, Kalmar University: Doing business in India: yesterday, today, tomorrow.

Short summary of the presentations:

Sven-Eric Söder presented a very positive and dynamic picture of the emerging Indian economy. He started by noting the good and long-standing relations Sweden has had, and still has with India. Diplomatic relations were initiated already in 1948, one year after India's independence. India has the fourth largest economy of the world, after USA, Japan, and China. It has a comfortable reserve of foreign exchange built up by increasing exports also of advanced products like IT software. Indian industry is growing in many new fields. It is a democratic and open society and there is already a long history of interaction in trade and development cooperation between Sweden and India. The liberalisation beginning in 1991 offers new opportunities for increased economic exchange. Altogether this means that the potential in the Indo-Swedish trade is great. Last year the bilateral trade increased by 67%, which makes India among the 30 biggest export markets for Sweden. The promotion of imports are as important for the Swedish government as the promotion of exports.

Ingolf Kiesow, Swedish Defence Research Institute, gave a historical overview of Indian politics including the Kashmir conflict. In a broad canvass he sketched the historical background, emphasizing among many things the rather sharp cultural difference between India and its eastern neighbours in contrast to a rather diffuse and mixed relation to the West. Modern India builds to a large extent on the combination of the democratic mobilisation against colonial rule and the British government institutions it fought against. The roots of fundamentalism are also to be found in British India with both Hindu and Islamic ideologues working out their visions for the future. The Partition in 1947 has created deep wounds that are ever present in today’s political dynamic. The current phase of fundamentalisms and nationalisms are fuelled by the confrontation with the West. India has clear ambition to become a great power and feels that it needs to develop its own nuclear weapons to neutralise the Pakistani nuclear arsenal.
The Indian development policies after Independence failed. After the fall of its foremost ally, the Soviet Union, and after liberalisation in 1991, India has had a fast economic development in the 1990s. Hindu nationalism now emphasizes Swadeshi, that is, self-reliance, but is more of a cultural and ideological position that an economic one. Economically, most of the nationalists favour free trade and interaction with the West.
(See also his reports published at http://www.foi.se/)

Ulf Hjalmarson, NCC, gave a concrete picture of how it is to work as businessman in India. Construction of infrastructure is largely a political market, in which social relations and good contacts in the administration and with Indian business companies are very important. So is also support from the Swedish government when it comes to financial aspects. India now needs to modernize its infrastructure and make it more environmentally sustainable. Given the build up of Swedish experience during a long period of time there is now a vast scope for other companies to take advantage of the expanding market opportunities.

Bo Landin presented the ideas behind the Sweden India Business Council (SIBC). India is a growing market with a need for development of basic industry, infrastructure and environment, where swedish competence can be of importance. At the same time there is a quick development of new competence in several high-tech industries in India. There are good possibilities of matching between Indian and Swedish firms, in the sense that they are complementing each other. There are many Swedish companies with a long experience in India and medium and small Swedish firms could draw on this when they enter the Indian market. SIBC now plans a lot of activities, including a homepage, presentation of strategic business information, campaigns to promote trade relations and give a broader picture of India in Sweden, seminars, and annual business meetings. SIBC also wants to promote Indian investments in Sweden.

Staffan Lindberg, SASNET, Lund University, emphasized the dramatic transformation now taking place in India. While India was reeling under drought and starvation, the Green Revolution was born and with that sustained agricultural development and the feeding of millions. This was predated by slow but tangible institutional changes, notably land reforms, and investment in physical and social infrastructures (irrigation, transport, and energy; primary education and health). In itself the Green Revolution also gave rise to a tremendous spurt in the development of the domestic market and therefore served as an ever-increasing base for the development of consumer goods industries and services. Rural development has lead to an increasing integration of agriculture, industry and services. Households straddle between sectors; their members migrate for work across the continent. On top of this, India has emerged as the most important supplier of computer software programmes in the world. Add to this a growing entertainment industry (Bollywood, novels, etc.) and there is ground for the projection of global pre-eminence in these fields within short. (See article in Swedish in Internationella Studier, 3/2002, as a pdf-file).

He also pointed out that, despite dynamic modernisation of the economy, most of the economically active population still works in what can be called the informal sector, and that modern business has to learn how to relate to this fact. Even big companies have temporary employees, whose work motivation is much lower than the permanently employed and who are not organised in trade unions.

Like Kiesow, he noted that Hindu nationalists are keen to promote Hindu cultural values in business but are at the same time keen to use modern technology, increase foreign trade and exchange. Looking at India, it is also important to note the political and economic differences between various regions and that there is an ongoing process of political and economic decentralisation. Regional political forces are now creating many of the significant conditions for economic development. No single political party or movement can control the whole of India, which is also one the strong reasons for the stability of its democratic political system.

Finally, Hans Jansson, the Baltic Business School, Kalmar University, discussed the business environment in India since Independence. Indian development policies used to be characterised by a ‘stop-go-stop’ process, but nowadays it seems to be more of a ‘go’ dynamic. Foreign investments are also growing in India today, the annual inflow of FDI is about 8 billion US dollar, compared to 20 billion into China according to new World Bank estimates.
Today India is about to become the leading software centre within the development of information technology industry, including basic research in this field. A focused system of higher education in computer sciences and a global diaspora of scientists and managers (in USA and Western Europe) have created a competence that is not matched by any other country in the world. This has created a profitable base for FDI as well as led to the emergence of world-class MNCs from India. Jansson here gave a detailed account of Indian industry today. 25 per cent of BNP in India now comes from a broad and diversified manufacturing industry and the consumer market is growing very fast. Biotechnology and pharmaceutical industry were also mentioned as a promising future business field.

He also said that Swedish companies need to adjust to a more complex context when working in India. Networking through social relations is very important in economic transactions. This includes knowledge about how to deal with the bureaucracy. It is also important to learn how to deal with corruption, and be able, for example, to distinguish between legitimate gifts and illegal transactions (bribes). Social issues are also important to consider together with various ways to get around the many bottlenecks in Indian business life, e.g. infrastructural deficiencies.

(Copies of Hans Jansson’s overhead presentations can be requested from Anna Jakenberg at the Swedish Ministry of Foreign Affairs.