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.