Evidence of meeting #66 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was indian.
A recording is available from Parliament.
3:30 p.m.
Conservative
The Chair Conservative Rob Merrifield
We have a quorum.
We want to thank our witnesses for coming in. We are continuing with our study on the comprehensive economic partnership agreement between Canada and India.
We want to thank...Mr. Dhesi, is it?
3:30 p.m.
Conservative
The Chair Conservative Rob Merrifield
Thank you.
We also have Mr. Ghuman.
I murdered it, but that's okay. I murder a lot of names. I'm consistent that way. I don't pick favourites.
I want to thank you for coming in to give us your expertise with regard to the study. We will yield you the floor respectively, and then we'll open it up for questions and answers.
We'll start with Mr. Dhesi.
3:30 p.m.
President, Pacific Exotic Food Inc.
Thank you.
Chair and members of the Standing Committee on International Trade of the House of Commons, I, Gian Singh Dhesi, wish to share with you information on the potential benefits of doing business with India.
I would like to inform you that I moved to Canada from India in 1969 after graduating in Civil Engineering in India. I had a wonderful opportunity to share my engineering knowledge while working as an engineer for B.C. Rail Ltd. I also contributed to enhancing business ties between Canada and India while acting as general secretary of the B.C. chapter of the Canada-India Business Council from 1993 to 2005.
I would like to share information on the potential benefit to the Canadian economy of the growing demand of the Indian economy. Since big multinational corporations already have a presence in India, the key focus is on doing business with India.
In Indian culture, guests are treated—this is an important part—as gods, and that’s one of the reasons India has been attracting foreign traders and trading with other countries for many centuries. Since India was ruled by the British for nearly three centuries, the Indian economy is just like the North American and British economies. The Indian economic system has a basis similar to that of the British system. Through this report, I would like to share key information on the various sectors of the Indian economy and on how serving these sectors by meeting their demands can benefit Canada.
The following is my submission to the chairman, covering key information on the various sectors of the Indian economy. I won't read everything, but I will outline the information I want to share with the committee.
In the history of trade, India was a closed economy until 1991 and there were stringent restrictions on foreign investment. On July 24, 1991, the first step towards liberalization of the Indian economy was taken by then finance minister and current Prime Minister Dr. Manmohan Singh when he proposed a liberalized industrial policy and economic reforms to open Indian markets and allow opportunities for foreign investors by offering investment licensing and by organizing their active participation in trade fairs.
I would like to speak about the demographics of India.
In 2011 the Indian population was 1.241 billion compared to the North American population of 346 million. Out of the total Indian population, 623 million are males and 586 million are females.
India's workforce is expected to rise so that those between 15 and 64 will go from representing almost 64% of the population in 2009 to 67% in 2020. This is the projection. Meanwhile, China's population is expected to start declining in 2014 resulting in a labour shortfall by 2050, according to some estimates. The labour force in India is expected to increase by 32% over the next 20 years, until 2031, while that in industrialized countries will decline by 4% and in China by nearly 5%.
Between 2006 and 2011, consumer spending in India almost doubled from $549 billion U.S. to $1.06 trillion U.S. There are 250 million people set to join India's workforce by 2030. As a big chunk of the population shifts into the working age group, the offshoot will be an increase in disposable incomes and conspicuous consumption. India’s favourable dynamics, accompanied by the population's growing propensity to spend, have lured investors.
There are 200 million people between the ages of 18 and 25 in India, and manufacturers of fashion wear to motor vehicles, all are targeting this group.
India’s growing middle class is acting as a great fuel in demand for consumer goods. The increasing middle class is adding demands on housing, infrastructure, transportation, electricity, banking services, consumer goods, mobile phones, Internet, electronic devices, and many other much needed services.
India's middle class is expected to reach 267 million by 2016 while the Canadian population is 34 million plus. Canadian companies and the Canadian economy can benefit from the growing Indian middle class by offering products and services catering to this growing segment of India.
I will talk briefly about the economy, but it is detailed in my report.
India’s trade-to-GDP ratio increased from 15% to 35% of GDP between 1990 and 2005, and the economy is now among the fastest growing in the world. India’s GDP growth in 2011 was 6.8% and was $1.84 trillion U.S. India’s GDP growth is forecasted by the IMF to be 6% in 2013.
There are other things, but I don't want to take your time.
According to world figures, India is encouraging private participation in infrastructure development.
While agriculture’s share in the country’s economy is progressively declining, India remains a global agricultural powerhouse. It has the world’s largest area under wheat, rice, and cotton, and is the world’s largest producer of milk, pulses, and spices. Based on this information, a growing economy always has a growing demand for raw material products, services, and technology. Canada can benefit from India's growing economy by meeting the demand of the Indian industrial sector.
Now I will talk briefly about all the sectors.
The Indian telecommunication sector is the second largest in the world after China. As per the TRAI, the Telecom Regulatory Authority of India, report covering the quarter from April to June 2012, the total number of telecom subscribers was 965.52 million, which was an 1.49% increment over the previous quarter. A majority, 61.89%, of wireless users live in urban parts of India. Whereas the population is one-third urban, the telecom users are two-thirds of the total population.
Total Internet subscribers, excluding Internet access by wireless phone subscribers, were 23.01 million, a 0.66% change over the previous quarter.
Regarding broadcasting and cable services, there are 831 private satellite TV stations presently in India, 184 pay channels, and 245 FM radio stations.
For the manufacturing of telecom equipment, foreign direct investment, or FDI, is allowed up to 100%. At present, 74% to 100% FDI is permitted for various telecom services, and 100% FDI is permitted in the area of telecom equipment manufacturing and the provision of IT-enabled services. This has made telecom one of the major sectors attracting FDI inflows in India.
There is potential business for Canadian telecom sector companies that offer research and development services and products in Canada to offer the same to Indian companies.
In the area of the Internet, IT and ITES, in 2011 India had 110 million Internet users and Internet commerce business worth $10 billion U.S. By 2013, India is expected to have 273 million Internet users and a potential $30 billion U.S. in Internet commerce business. That means a threefold increase in Internet commerce business, making India a potential market for Internet and related services businesses.
It is a great opportunity for Canadian companies offering online advertisement and value-added services in Canada to target such a huge Internet market in India.
3:40 p.m.
President, Pacific Exotic Food Inc.
That is why I am just taking one or two lines out of this, and then you will have everything in the report to read.
Further, I want to say that there is an opportunity in real estate.
3:40 p.m.
Conservative
The Chair Conservative Rob Merrifield
We can see the numbers. We have your text here.
My problem isn't your content; my problem is the time. You will be able to expand on some of your numbers and some of your documentation as you get into the questions and answers.
3:40 p.m.
President, Pacific Exotic Food Inc.
I just want to outline where Canadian companies have the potential to do business in India.
3:40 p.m.
Conservative
The Chair Conservative Rob Merrifield
I loved your presentation. I am a numbers person, so I like this.
3:40 p.m.
President, Pacific Exotic Food Inc.
Finally, I would like to say that India is one of the fastest growing economies in the world at the moment. There is a great opportunity for Canadian companies to offer products and services to Indian companies.
3:40 p.m.
Conservative
The Chair Conservative Rob Merrifield
I agree.
We will now go to Mr. Ghuman. Please go ahead, the floor is yours, sir.
3:40 p.m.
Jas Ghuman As an Individual
Chair, and committee members, good afternoon. I came to Canada in December 1977, 35 years ago. I came here and liked it for a few days and then after a few days I really wanted to go back to India, because I thought, no, no, I don't think I want to live here.
3:40 p.m.
Some hon. members
Oh, oh!
3:40 p.m.
As an Individual
Exactly. December 25, Christmas Day.
When my sister took me shopping, I had to carry the cart, and it was a very different experience for me because we used to have a servant in our house and here I'm carrying the cart behind my sister. So I told my sister I wanted to go back. My father hid my passport and told me I could not leave until I became a citizen.
Fortunately I got a very good job with PWA, Pacific Western Airlines. My very first night experience, again in the winter, I got an evening shift, so I was done by one in the morning and there was no bus leaving from the airport. I had to walk in the snow in my shoes almost 9 or 10 miles. I didn't know how to catch the bus or which bus to catch or anything. So another bad experience, crying to my father that I wanted to go back. “No”.
My father was an ex-army officer, from the British Army, by the way, and his rules were it and you had to listen to him. So, fine. Finally I settled myself here and got into some other business, such as driving a taxi. Then I got into the taxi business and bought my own taxis in 1980. At that time I was only 23 years old. Then I got married. I have three wonderful children and a lovely wife. Then I started enjoying myself here.
I lived in a very small room where I was really enjoying my life back in India. Here I lived in a small room and from there I grew up and I did excellent. I got into some business. I worked for the B.C. government. Finally about 13 or 14 years ago I started doing business back and forth with India, real estate, buying property and developing that into resorts. That is the experience I am going to share with everybody, and a few other experiences back in India, for the last 14 or 15 years. That's me.
Anyway, I'm going to talk about India. Everybody is talking about India as booming. Yes, but we do have some problems. There are problems everywhere, not only in India but in Canada and America. Everywhere. But some countries know how to resolve the problems and some countries don't. India is one of them.
I am aware that running a business in India is not an easy task because that was my own experience, especially for us Canadians. It is difficult, no doubt, but not impossible. Running a business is one thing, but running it successfully and maintaining that success is another story altogether, for the reason that you never know when some top-notch politician is going to come along and demand a piece of the pie from you. They want to have a share, and they would like to give you some money—or they might not give you the money. It is not only politicians but some bureaucrats also. They will demand this if you are doing very well.
I know this from my own personal experience and that of some of my good friends. One of my close friends is a Canadian citizen and he also came in 1976. He invested almost $1 million in India in 2002. He ended up having this problem of this kind and finally he had to leave the country, take his money out, and he came back with $500,000 less.
These are the negative things we have in India. As Canadians, we are used to getting things done systematically. When no system works in India, or it is manipulated, it leads to a lot of frustration and unwanted stress, which I have gone through from time to time myself in the last 13 or 14 years.
When you enter India, no matter where you go, corrupt people will find you. You will come across them everywhere. But to find good people...yes, there are some good people. Even in politics there are some good people.
3:45 p.m.
An hon. member
On this side of the table.
3:45 p.m.
Voices
Oh, oh!
3:45 p.m.
As an Individual
You have to make a really good effort. There are definitely good people, but you will have to look for them and establish a bond with them.
Mr. Shory and Mr. Sandhu know how it is there.
Your foundation for success is established when these good people become a part of your business life. They are definitely big assets to you.
Any concerns or issues we might have with regard to corruption or the system in India are still not reason enough for us to not consider investment in India. There are several investment opportunities there. Real estate is probably right at the top of the list, followed by import and export opportunities, education, and many more.
Real estate is really doing very well. Whatever we invest in India in real estate we can double or triple in less than five years. That is the investment in real estate. Unfortunately, there are a few problems. We can only buy commercial properties. We can only buy houses, residences. That is not the only thing. If the Indian government allows us to buy agricultural land for Canadian investors, then we can do a lot. In greenhouses we can get everything done our way, systematically, and we can make a lot of money from that.
What do we make there? We invest money there. We make a profit there, and we can bring the profit back here. In India there is consumption; there is the population. Any concerns for issues that we might have with regard to corruption or the system in India, they are still not reason enough for concern about investing in India.
In terms of involvement by the Canadian government, a lot of Canadians are interested in investing in India, and we can make good profits. These profits will be brought back to Canada, which will have a positive effect on the Canadian economy in the long run. But we would like to stress some kind of assurance or security by the Canadian government so that we can comfortably move ahead. This can be established by negotiating with the Indian government to give us incentives and to safeguard our investments.
3:50 p.m.
As an Individual
Importing from India is a big business. There is no limit as to what can be imported from there, ranging from spices to clothes and furniture, and the list goes on. And since labour is relatively inexpensive in India, we can expect prices to be at a level giving us a reasonable profit margin on our goods sold in Canada. Again that will have a positive effect on our economy.
I also propose that Canada export of a lot of commodities to India. These are commodities in abundance here that can easily be consumed or absorbed by the Indian population, such as lumber, lentils, coal, and a few other things.
There is one hitch, as freight is very expensive. If the Canadian government could talk to the Indian government and the latter could give us some sort of subsidy, which they always give, we could compete with the Asian market in terms of freight.
Another issue I would like to stress is investment and investors from India. If investors from India are given the opportunity to invest in Canada, it will surely boost our economy. There has been a relatively low visa rate for genuine investors, which is one thing that our officials at the Canadian High Commission in India need to pay a lot of attention to. It seems as if people don’t obtain investment visas on genuine grounds but that some sort of pick-and-choose method is used instead. We need to fix this so we can encourage investment from India.
I'm going to give another small example.
3:55 p.m.
Conservative
3:55 p.m.
As an Individual
Last year a friend of mine came on a business visa. He invested $750,000 and this year he's bringing $1 million. It's all official money. We do need these kinds of investors.
There are a few more things, but anyway....
3:55 p.m.
Conservative
The Chair Conservative Rob Merrifield
Very good. You'll have a chance to expand on them when we get into questions and answers. Those were very good presentations and a very good introduction in the time we have.
We'll start with Mr. Davies. You have seven minutes.
3:55 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you, Mr. Chairman.
Thank you, Mr. Dhesi and Mr. Ghuman, for taking time out of your busy lives to be here with us and for your expertise.
Mr. Ghuman, part of the benefit that we have as committee members is hearing from people such as yourselves who have long experience dealing with the Indian business environment. I'd like you to continue what you were saying about the importance of attracting business investment here and any experiences you have with the visa system.
Maybe I could ask you this directly. Do you have any personal knowledge of Indian investors or business people who've had trouble obtaining visas to come to Canada?
3:55 p.m.
As an Individual
Yes, I do know a few people. They really want to invest here but for some reason their applications are either on hold or are in process. Some people who applied after them have received a visa. I won't name them but people who received business visas had some connections in the embassy. Definitely it's not working properly in Chandigarh and the Canadian embassy there.