India Inc. gets set to do business with China

By SiliconIndia   |   Friday, 27 June 2003, 07:00 Hrs
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NEW DELHI: After years of hysterical fear of China emerging as a potential competitor, Indian entrepreneurs are finally bracing to cross the Great Wall and make their presence in the land of opportunity.

Experts say ground realities from China now point to a greater willingness on the part of the Indian industry to look more positively at the world's most populous nation than they have ever done in the past.

As Indian Prime Minister Atal Bihari Vajpayee wrapped up his landmark six-day visit to China Friday, the Indian industry is fast shedding its China-phobia and hoping to emerge as its partner.

"There is a big change in the attitude of the Indian industry towards China. We are beginning to see a new phase in business ties between India and China," said Anjan Roy of the Federation of Indian Chambers of Commerce and Industry.

"Hopefully, the trade ties between the two countries will improve rapidly now as Indian companies now have greater understanding of the Chinese market and business process," Roy told IANS.

Experts say bilateral trade between India and China has the potential to reach $10 billion within three years, up from $5 billion now.

Roy said Vajpayee's trip to China, the first by an Indian prime minister since 1993, has achieved significant results in improving economic relations.

Vajpayee was accompanied by a high-level business delegation representing a wide spectrum of Indian industry, including IT, pharmaceuticals, automobile, and engineering goods companies.

"You cannot be a businessman and ignore the Chinese market that is growing at 50 percent per annum," says Anand Mahindra, president of the Confederation of Indian Industry (CII), the country's premier business lobby group.

"My advice to my company when I go back will be 'Forget other markets for the time being, go for China'," says Mahindra, managing director of automobile major Mahindra and Mahindra.

Mahindra and Mahindra is reportedly planning to assemble and sell its sport utility vehicles in China. If the plan goes through, it would be the first foray of an Indian automobile company into the Chinese market.

Industry observers say the technology sector in both the countries would receive a major boost as the two Asian giants recognise the scope of exploiting each other's strengths.

It wasn't long ago when the Indian IT industry's fear of China emerging as a potential competitor in the technology space bordered on full-blown paranoia.

"Most of these industry level visits to some other country tends to be an expression of interest," said Sameer Kochchar, CEO of New Delhi-based IT industry research firm Skoch Consultancy.

"But this time we are set to see something concrete coming out from this exercise so far the technology sector is concerned. The visit goes much beyond a fee-good factor initiative.

"The prime minister's proposal of an alliance between Indian and Chinese IT companies for Olympic 2008 contracts is clearly an indication that companies in both countries are keen to identify areas of engagement," he added.

Emphasising on the importance of cooperation between IT industries in India and China, Vajpayee Thursday called upon technology firms to join hands to provide state-of-the-art solutions for the Olympics due in Beijing in 2008.

"The Olympic Games could provide a good opportunity for Indian and Chinese IT firms to work together," he said.

"Our experience has shown that in mega events like these, a substantial proportion of the contracts awarded in the IT sector are actually sub-contracted to Indian firms by contractors from the developed countries."

Kochchar said the Indian industry would focus on leveraging the complementarities between the two countries.

"It is a fact that China is a manufacturing powerhouse, while India is a knowledge-driven power in which services accounts for half its economy. China is far head of India in hardware sector while India has competitive edge in software.

"The focus would now be on leveraging the strengths of each other and gain market share in other countries. So, both the countries would be rival in some sector and collaborator in others."

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