Mr. Sood.
Evidence of meeting #64 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 need.
A recording is available from Parliament.
Evidence of meeting #64 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 need.
A recording is available from Parliament.
4:05 p.m.
Chief Executive Officer, Starling Corporation
Most of the area, other than services, to a large extent is directly and/or indirectly regulated. Where it is not, where ownership is not with the government, certainly the rules and regulations are such that we'll still have to go through that situation to make something happen.
We have some phenomenal industries here, say in mining, and they can go and sell a lot of their knowledge and technical know-how to India, but mining is such a sensitive issue in India that even when our companies want to go and work with the private sector there, it is difficult because of the way the process works over there.
4:05 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Could I just drill into that, because you brought it up? The state level in India is more than a bit protective, especially in the mining sector, and of course that is one area where Canada has a great deal of expertise. That's a great example, but what are the other issues where we bump up against that wall at the state level? What other sectors face this?
4:05 p.m.
Chief Executive Officer, Starling Corporation
The important sector to look at is agriculture. That's extremely sensitive. I would not be surprised if at any time India decided to just stop the import of something, because it controls the situation quite closely.
If you look at infrastructure, it's regulated to a large extent. There are some private sector opportunities there, but infrastructure also has a lot of regulation.
Then there is energy, which to a large extent is also regulated.
Then you look at education. You know that our universities are doing a lot of work. It's not that they are not in private sector, but giving a local degree over there has its own rules and regulations, so again you are held up there.
Defence is totally regulated, and has a huge budget in India right now. They are spending a lot of money on defence, but it is totally regulated.
Mining I just mentioned.
Typically, if you look at where our expertise is, we do run into that little problem. However, notwithstanding the point Suresh made that services is a great area for us to grow, how much will we grow? We can grow, but not at the same rate as mining or something like that.
4:10 p.m.
Conservative
4:10 p.m.
Liberal
Lise St-Denis Liberal Saint-Maurice—Champlain, QC
Thank you, Mr. Chair. I would like to thank the witnesses for being here today.
I will speak in French.
I would like to come back to what Mr. Harris was saying.
Mr. Sood, you spoke at length about non-tariff barriers. Everything is regulated, which does not necessarily make for easy agreements. Do you have any suggestions for eliminating these restrictions in a context of free-trade negotiations and agreements?
4:10 p.m.
Chief Executive Officer, Starling Corporation
I would say that the rules and regulations are not just for Canada; they're for everybody. If you want to be a front-runner, I imagine that you have to bring something to the table that India really needs and that can create a strong bond between the two countries.
It's difficult to say what that is, because every country is pursuing India. One thing that I can say that Canada has, which is very powerful and strong for India—and this goes back to earlier points—is that employment is a big issue in India and Canada. If we can agree to certain things that India needs, only then will we maybe get preferential treatment. Other than that, I don't think any rules will change just for Canada.
4:10 p.m.
Liberal
Lise St-Denis Liberal Saint-Maurice—Champlain, QC
Would you say, as the University of Calgary report states, that to a certain extent, there is a lack of interest from India with respect to future negotiations between the two countries to expand the trade of goods and services? Do you find that India is, in fact, not really interested in this respect?
4:10 p.m.
Chief Executive Officer, Starling Corporation
No, I don't think that's true. I've heard that the negotiators keep on changing, and that's a little difficult when you're sitting across the table and negotiating.
India will not be able to survive without these relationships. They need energy. They need food independence. They need support in mining. They need to be supported, and they don't have that. They need infrastructure.
Are they interested? I'm sure they are very interested. The question is whether they are interested in doing that with Canada or with any other country, because they have laid out huge budgets for spending in these areas.
Through CEPA and other negotiations, we have to try to be the one they come to for these requirements.
4:10 p.m.
Liberal
Lise St-Denis Liberal Saint-Maurice—Champlain, QC
Mr. Madan, Mr. McRonald, do you have anything to add?
4:10 p.m.
Champion, Canada Chapters, Member, Global Board of Trustees, The Indus Entrepreneurs
I think the CEPA is as important to India as it is to Canada. They do recognize their own economic issues, but Indians are known to be slow decision-makers. They are over-conscientious, and as a result they sometimes don't come to the table right away. They do have their own political realities and upcoming elections, and all those issues are also at play in the negotiations.
On the whole, I think there is a huge interest both from Canada and India to conclude these agreements and move forward, possibly within the year.
4:15 p.m.
Executive Director, Canadian Livestock Genetics Association
I certainly agree with the comments of my colleagues. I think that was reflected in my presentation about their setting up some technical market-access requirements for bovine genetics. They want to have the same requirements for all countries wanting to export to India. So I think Canada really needs to try to get close to India and to work with the Indians on the basis of science.
They know what they need, at least at the national level. I think that in our case, they're finding that the realities on a regional level are not allowing them to move as quickly as even they would want to. It's a matter of building that capacity even to to the point where they can start to move forward with the things they know they need to do as a nation. If we can be an effective partner in helping them to do that, I think that will give us an opportunity that may give us an advantage over some of our competitor countries.
4:15 p.m.
Liberal
Lise St-Denis Liberal Saint-Maurice—Champlain, QC
During the meeting on November 27, 2012, officials from the Department of Foreign Affairs and International Trade told the committee that Canada was highly interested in making it easier for Canadian businesspeople to enter India temporarily.
What could be done to make it easier for Canadian businesspeople to enter India temporarily?
4:15 p.m.
Chief Executive Officer, Starling Corporation
Is the question to bring Indian people to Canada?
4:15 p.m.
Liberal
Lise St-Denis Liberal Saint-Maurice—Champlain, QC
No, the opposite. What could be done so that Canadian businesspeople could go to India to familiarize themselves with the environment and do business?
4:15 p.m.
Chief Executive Officer, Starling Corporation
Well, obviously, there's a need. People would want anybody from whatever part of the world, because of the requirement. As Rick mentioned, he's not just talking about India but the world. If India needs to progress in the dairy area, they will have to invite someone like Rick to come and teach them, speak to them, convince them.
I think it's a very needs-based requirement. Typically, people from India go out to learn and then come back. Whichever sector it is, they've gone out, trained themselves, and then they've come back and/or stayed out. But typically it's the other way around; it's very rare that people go from here to India.
4:15 p.m.
Liberal
4:15 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Thank you, Mr. Chair.
And to our witnesses, thank you for being here this afternoon and sharing your wisdom.
I agree that it's very important that we continue to move forward with these negotiations with India on a comprehensive economic partnership agreement. The seventh round of talks was completed earlier this month. We know that India's government tables its budget on Thursday and that there's an election next year, so they're going through some challenging times. They're talking about raising duties to 8%. The more we can level the playing field for Canadian businesses and remove those tariffs, the better for both economies.
My first question is for Mr. Madan from the Global Board of Trustees.
I was reading in the Financial Post on the weekend about “Billionaires [vying] to set up banks in India”. When we are talking about the opportunities in the service sector for Canadian financial institutions, do you see some opportunities for Canadian banks to expand and market into India?
4:20 p.m.
Champion, Canada Chapters, Member, Global Board of Trustees, The Indus Entrepreneurs
I believe many Canadian financial services companies would be interested in setting up shop in India, whether Canadian banks, Canadian mutual fund companies, Canadian asset managers, Canadian brokerage firms, or Canadian law firms. We recognize that the market opportunity in India is substantial, and we do have an interest in tapping into that market and offering better quality products and superior services to the Indian marketplace. But current regulations do restrict us from entering that market, especially in the portfolio management area. I cannot directly buy Indian securities. I can buy Indian securities listed on the American Stock Exchange or the London Stock Exchange, but if I have to buy Indian securities in Mumbai or Delhi, I cannot buy them directly. I have to open a company in Mauritius, and that company there will have to end up buying them. As a result we lose our direct connection with the invested company. I do not have a direct information flow from those companies and an ability to evaluate them. The ability to manage these investments is limited, which creates significant impediments.
4:20 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
That helps to clarify it.
I believe the plan is also to expand foreign equity holdings to 49%, according to the statement released on Friday. So it is trying to address some of the opportunities for the Canadian financial service sector. As well, an interesting statistic is that 35% of India's adult population has accounts with lenders and other financial institutions. According to the World Bank, the global average is 50%. If you take 15% of 1.2 billion, there's a big opportunity for financial services.
4:20 p.m.
Champion, Canada Chapters, Member, Global Board of Trustees, The Indus Entrepreneurs
That's exactly right. We also recognize that the real estate sector in India has been booming for the last so many years. In Canada, typically, real estate operators have real estate investment trusts that pool the funds and essentially buy various properties in different geographic areas, for diversification as well as proper management.
In India, a Canadian company cannot buy real estate. Individuals are allowed to purchase real estate directly, including individuals resident abroad, but Indian regulations do not allow corporations to buy real estate and manage it collectively in a more efficient manner.
4:20 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Mr. Sood, I'm very bullish on technology. My Kelowna—Lake Country riding in the Okanagan in British Columbia sees a great opportunity in that. We see the synergies of working with post-secondary students in India and bringing them to Canada. It has been fascinating listening to The World is Flat on CD, including when exercising earlier. I was thinking about the people complaining about the call centres in India. There are many very bright technologically inclined students who I think would be great assets in our country.
How do you see the opportunities for such human resource transfer working bilaterally with India in Canada?
4:20 p.m.
Chief Executive Officer, Starling Corporation
My first reaction is that it's a very important thing. We have to be able to do it.
Concerning the great minds and all in India, the point is that when we look at India from Canada's vantage point, it's not just about having great minds at lower wages or something like that; the way to look at it is in terms of the value they contribute from the standpoint of timing. By that I mean that when we are sleeping, somebody is working there, and you can get the project done, if you have people here who can pick up the project in the morning and then send it back in the evening. We have to play to our advantage, even in this particular area, and connect this in a very strong manner.
I want to take one step to the side and then bring you back to this.
Not too long ago, a number of Indian Administrative Service officers visited Canada and had a very intensive two-week training period in Canada and then went back. Now, the Indian Administrative Service contains the bureaucrats who are going to run the whole thing in India. They're the people who are going to run the country, in a way. They went back as great friends of Canada and they will start implementing certain things they have learned here, and Canada is going to be in their mindset. Those kinds of exchanges will bring us to the other things, which have to do with trade and hard decisions.
But in this relationship and coming back to your point about the youth and intelligent minds, we have to find a way to make this happen. It could be done through exchanges, it could be done through proper visa systems, and stuff like that.