Ladies and gentlemen, I am Satish Thakkar, the immediate past president of the Indo-Canada Chamber of Commerce. I am also a practising chartered accountant and CGA. I run a boutique business and financial consulting firm in Toronto.
It is a great honour and a privilege to be appearing before the House of Commons Standing Committee on International Trade.
The comprehensive economic partnership agreement, CEPA, that is at present being negotiated between Canada and India, and that is scheduled to be finalized and signed in 2013, will undoubtedly expand bilateral economic relations and put them on a different, speedier trajectory.
Canada and India share many socio-economic and political traits. They are both parliamentary democracies and pluralistic societies that are governed by the will of the people. Both are knowledge-based economies that are based on a perennially expanding services sector. Both societies and economies have complementarities which, if harnessed properly, will lead to integration of bilateral relations.
One of the less acknowledged aspects of the two countries is that they are neighbours to giant economies and political superpowers. In Canada's case, it is the United States. In India's case, it is China. Not surprisingly, the largest trading partners of both countries are their neighbours. The economic slowdown in the U.S. and the focus on internal consumption in China are significant global shifts in economic trends, and will bring Canada and India closer in the near future.
Canada has many things to offer India, and Canada needs to look at India with the seriousness it deserves. India's unparalleled growth is not something that Canada can ignore. Growth has averaged 8% of GDP for over a decade, and will continue to grow for a long time. In addition, the number of consumers, at 1.2-billion strong, with a rising upper middle class, offers tremendous opportunity for Canadian goods and services.
Some statistics are just mind-boggling. For instance, in telecommunications, there are more than 500 million cellphone subscribers, with an additional 10 million to 15 million added every month. In infrastructure, India plans to spend $1 trillion on infrastructure in the near future. In education, India needs more than 1,000 new universities and 50,000 vocational colleges to cater to its growing needs. The demographics in India, where more than 50% of the population is young, under the age of 25, will ensure that the demand in all spheres will remain high and insatiable.
In all these three spheres, Canada can offer India a great deal. It is no wonder that the world is out to do business in and with India.
As compared with Canada, Australia, for example, has three times the trade volume with India, even when Canada' s economy is 50% bigger than Australia's. One of the major causes of Canada's relative economic isolation is its over-dependence on the United States. That is not a bad thing, per se, and the significance of the United States is not going to be reduced. The U.S. will remain Canada' s major trade partner for years to come, but its significance will reduce because of the negative impact of the economic slowdown south of the border and the rising economic prominence of Asia.
Canada has reformulated its international trade strategy, particularly when there is a heavy demand for such Canadian goods and services as agro products, energy, minerals and metals, and other high-tech products in Asia. In such an emerging scenario, CEPA offers Canada a long-term relation-building instrument with India, and will assist in addressing issues that have kept the economic relations frozen at a suboptimal level.
These are among the issues that will be on the agenda: elimination of unnecessary tariffs; liberalization of laws related to import and export; the overall regulatory environment; trade facilitation; re-examination of the foreign direct investment regime; the movement of people; and other areas of economic cooperation, such as intellectual property rights, cooperation in agriculture, innovation, science and technology.
Already several agreements in many of these sectors have been inked between the two countries, but the comprehensive economic partnership agreement will open new vistas.
However, I don't wish to create an erroneous impression about the opportunities that India offers, because these opportunities are wrapped in major challenges. For example, FIPA, which was concluded in 2007, is yet to be ratified by Parliament. India remains a very challenging business environment, with red tape, regulatory complexity, restriction on trade and investment, infrastructure challenges, and a very different business culture.
All these things require long-term commitment to succeed.
What can work in this scenario?
The key mantra to succeed is to offer a value proposition through a product and service that is in sync with India’s social and economic development agenda and meets the consumption and income habits of the consumer. The framework for CEPA should be such that both countries should see this value creation jointly, as partners, rather than as a client-supplier relationship. It should be a balanced, high-quality agreement to ensure long-term real market access.
An urgent task is to enhance Canada's visibility in India. Canada should not be viewed merely as a tourist destination, as the coldest place on earth, with beautiful scenery and a good standard of living. Instead, our strengths—financial services, health care, mining, energy, agrifood products, aerospace, transportation, sustainable engineering, high-level education—should be profiled properly.
The Canadian government, through political exchange, is doing and should further enhance visibility and credibility in India. The two visits by Prime Minister Harper and the exchange of senior-level ministerial visits are welcome developments and should be sustained.
Finally, the key role of the Canadian business community, academic community, Indo-Canadian leaders, and India watchers should be to work together to be the ambassadors of Canada promoting Canada's interests.
Thank you.