A.E.R.E.C.'S Conferences

India at the centre of the international scenario, a valuable opportunity for Italian entrepreneurs
A conference promoted by AEREC’s Commission for International Affairs

The productive scenario of a country that is increasingly emerging, the great possibilities that it can offer in terms of investment, with the political and economic profile that it assumes on the regional and international scene are the issues that the European Academy for Economic and Cultural Relations wanted to develop, promoting, through its Commission for International Affairs, the Conference on Economic and Business Opportunities in India, which was held in the prestigious setting of the Conference Room of Palazzo Marini, the Chamber of Deputies on the 2nd of July 2004. Supported by the Ministry of Foreign Affairs and by the Ministry of Productive Activities, the conference witnessed a large and attentive participation; there were academicians involved in the mediation that the Academy is promoting among its members and the international productive realities. In addition, as for the previous events promoted by AEREC, the Conference on India witnessed taking the floor, in turns, representatives of institutions and major businessmen that came to share their experience as operators for some time on the international markets, with major benefits for their activities. Above all, the Conference could count on the prestigious presence of the Ambassador of India to Italy, S.E. Himachal Som, whose speech was the 'peak' of the initiative.

To present the speeches, as usual, there was Arch. Vincenzo Valenti, Vice President Ispri and member of the Steering Committee of AEREC and of the Commission for International Affairs. Arch. Valenti began his first speech by recalling the activities carried out by AEREC in the field of economic and cultural cooperation and how the Academy is working hard to let known its members on the various productive realities, thereby encouraging the internationalization of their activities. "So far we have directed the attention on the countries of the Mediterranean area and the Middle East, but this time, we chose India because it is decisively at the centre of the international economic scenario, for the latest data on the economic development activities, for the GDP, the rate of growth, for the sectors in full development and for the many other issues that make it increasingly competitive. Nevertheless, one must admit that India, despite what was said, still has a modest presence of Italian operators. We wish that our conference today, contributed to the knowledge of the country and its potential. I would also like to remind you that this country has imports of about 50 billion euros a year, half of them being manufactured goods. It offers extremely interesting conditions in terms of local labour, in some sectors being very qualified. “

The President of AEREC, Dr. Ernesto Carpintieri, made a heartfelt thanks to the President of the Chamber of Deputies, Hon. Pierferdinando Casini, for having offered the beautiful room of Palazzo Marini, summarizing the programmatic postulates of the Commission for International Affairs, recalling previous events promoted by the latter and finally speaking about humanitarian assistance. Afterwards, he gave the floor to the Ambassador of India for his expected speech.

"In my long career as a diplomat - began SE Himachal Som - I had not found yet in the Western area a country like Italy, where people expressed such a massive appreciation for India and for its people. I have found many similarities between the Italian people and the Indians. They are both open, transparent populations, oriented towards the concept of family, of city, of nation. Even historically, you can find similarities: they are, in fact, two civilizations that were influenced by other great civilizations. Italy had the Renaissance, we had the Golden Age. But where, at the base level, that is, from the population, we can have great appreciation with regard to India, it does not happen the same thing at the level of government, institutions and the business world. Despite fertility concerning relations we can say that the ground has remained largely uncultivated." "The fact is surprising because, if Italy is well advanced in many areas of the modern economy, India is as well. The trade between Italy and India amounted today to 3 billion dollars, which is nothing compared to what it could be, especially if we take into account the complementarity between the two countries. With minimal effort, in fact, both from the government and from the business world, this figure could reasonably be doubled." "Why should you go to India? My country is very big and has about one billion inhabitants. Of this one billion, about 300 million people are like me and like you, they belong to the middle class and therefore they are consumers. Think of an ordinary product like toothpaste sold at 50 cents to 300 million people: calculate and see what profits there can be." "India is growing at an average annual rate of 8% and beyond. Just two days ago there were disclosed figures relating to growth concerning last year, slightly slower than the average, but still positive. According to the latest World Bank’s estimates, India is in fourth place among the economies. It is a politically stable country, with a positive, active and working government and institutions. It has a strong accounting system, transparent and reliable, based on the Western model. The supremacy of a legally constituted state and of an independent magistracy (an Indian Prime Minister was dethroned by the magistracy). The press and the information in general are free and very careful. Intellectual property is strongly protected."

Returning to the purpose of our meeting, I want to reiterate our determination to establish with Italy solid trade and commercial relations that can be beneficial to the parties. In this globalised world, export is as important as imports. In an integrated economy, what is important is the growth and prosperity of our peoples. Let me just mention two areas where I think that Italy could play a decisive role: the construction sector, for example, from roads to bridges and harbours. Only in the last three years, we have launched the work of construction of 14,000 km of highway that connects the north with the south, the east with the west of the country. Italy has a great tradition in this area and enormous capacity, but no major company expressed interest. Companies from China and Malaysia came here. You have great ability to build ships and harbours, an area where we are behind with 50 years. I wonder: how many Italians came to India to gather information with regard to this sector? Only Fincantieri and Finmeccanica settled in India for a major project which will certainly bring a huge profit and prestige to these two companies." "We must make an effort to connect the Italian small and medium enterprises with the Indian ones. The Indian General Confederation of Industry, but also the Chamber of Commerce and Industry, provide assistance for Italian companies through cells aimed at giving the necessary assistance in terms of language, legal regulations and to ensure maximum benefits. Apart from the political relations, on which I can testify personally how good we are, I would think that I failed in my mission unless I succeeded in developing a plan for trade and economic relations between Italy and India. "

The intervention of the Ambassador was concluded with an appeal to Italian entrepreneurs to travel to India and verify directly the extraordinary possibilities of the country and he gave the floor to Dr. Mario Palma, Embassy Counsellor, Head of Office 1 (South Asia) of the Ministry of Foreign Affairs for his short but significant greet to the audience. "I am here," began Dr. Palma - "not only to greet and wish success concerning this initiative from the part of Minister Frattini, but also the testify concerning the work that our Asia management, and in particular my office, is conducting in full awareness of the growth in importance in terms of regional and international economy and politics of India. Ambassador Som supplied very important and precise indications about the growth of the country and the great potential that India offers in various fields that were mentioned, for those who want to invest. I join his appeal: let us not arrive too late!"

More detailed news on Indian economy, supported by a visual projection of data and statistics were provided by Minister Gurjit Singh, Deputy Head of Mission.
He said: "Why establish a cooperative relationship between India and Italy? This is the question that every businessman, every trader should ask himself. The core issue is: can you take advantage of this cooperation in order to make the most of your profitability and bring benefits to your business?" "We start by underlining a problem, the protection of trademarks and patents.
I know that from the point of view of technology, in Italy, there are some problems in this respect. In India, however, we do not have them because we have a regulatory system that protects strongly creativity and innovation. There is also the privilege of special economic zones ("special economic zones"), you can read about that in the green booklet that was distributed at the entrance. What is more important, however, are the economic data relating to trade that a sector study provided by a specialized agency places India in the second place worldwide."
"Based on studies, the gross domestic product per capita in India amounts to 4000 dollars. As it has already been mentioned, we are talking about a market of over 300 million consumers. The economic growth is largely supported by what the middle class spends. As you can see from the figures above, the rate of growth in the consumption of various products is not only high, but it remains stable."
"The Italian tendency to market branded products can only be compatible with the growth in consumption. For example, Murano and Bulgari understood that and they have recently opened shops in our country. “ "An interesting fact is that last year, exports from India to Italy grew by 6% as from Italy to India. We are an important economic partner for Italy. Concerning foreign direct investment, in recent years there has been an increase of 2%. See in this slide the list of main products that India exports to Italy. What I want to emphasize is the growth of certain sectors, such as textiles and clothing, a strategic sector is that of leather and related products: last year, an item of clothing in leather out of 4 that was sold in Italy came from India. Another area of growing market in India is that of granite and stones, gems and jewellery. Italy had developed important trade relations with Latin America and the United States in these areas but from the information I have, I know that the turnover of the sector is significantly reduced. Producing in India, certainly with lower costs, it could be of great benefit for Italian producers, as it may enable them to maintain and increase the positions won in the past. Something is moving in these areas: we have signed agreements with manufacturers of Arezzo concerning the production of gems and jewellery and with Santa Croce for the production of leather and leather goods."
"Last week I was in Riva Del Garda, the exhibition-market of shoes, and there were 70 Indian producers of shoes, I wanted to meet someone, but they were too busy doing business! These producers use Italian machines and Italian design, and they have an ongoing relationship with the Italian market."
"We shall speak about the transportation sector now, which witnesses the presence in India of Fiat Iveco Tractors; thanks to their presence the production of car parts has grown in India, a sector that can certainly be of great interest to Italian operators. Let’s speak about another potential of cooperation between our two countries in the field of information technology. India, and everybody knows that, is a super power in the field of software production, just think that in the American presidential elections it was used a technology produced in India. Conversely, in Italy, the growth of this sector has been very modest. We planned for the end of this year, to bring to Italy a team of Indian software specialists to interact with your companies in the industry to explain to experts how to make use of the Indian model."
"In conclusion, let me remind you that our Embassy set up a website, in two languages, and in the commercial section, information is available in Italian. I remind you that for economic operators, we promoted the establishment of a "business visa", namely a visa for business, having the duration of a year that entitles operators to acquire all the necessary documentation in order to operate on the Indian market." Minister Gurjit Singh has therefore concluded his speech by referring to the material distributed at the Conference concerning any further information on areas of cooperation between India and Italy.

The Arch. Valenti gave the floor to Dr. Sergio Rodda, Vice President Confapi and President API, Turin.
"Speaking to an Italian small or medium entrepreneur about India and the opportunities that this country offers was very unusual until a few years ago; it could not be taken into account. Let us not forget that small and medium-sized enterprises in Italy first tried to get closer to European countries and then the countries of Latin America, both for the cultural affinity and the strong presence of Italian immigrants in these countries. Subsequently, the processes of globalization of markets prompted companies to a rapid process of internationalization, and then to look to more attractive emerging markets. There is no doubt that India is currently the second world economy in terms of growth rate of GDP. Due to the reforms that were initiated in 1991, its growth was accelerated to the point that in 2003 there was reported +8.4% in the manufacturing sector. After that, the recent elections witnessed the confirmation of the Congress Party for the leadership of the country, leaving all to assume that there will be a continuity of programmes of economic reforms, aimed at making India a global economic power. Nevertheless, the trade with Italy is very low, as pointed out by the Ambassador and Minister Singh. It seems to me that we are currently in the 17th place among suppliers of the Indian economy and in the 5th on a European basis. It is clear that we can and should do much more because, as we have seen, the standard of living of the Indian population is rapidly rising, and this means that soon there will be a large market for products made in Italy. SACE classified this country in the A category, which means that investing in India can be very beneficial, both for labour costs (which seems to be by 15% lower than Chinese ones) and for the possibility of using truly capable human resources. Moreover, the language in the world of work is English, and this allows us to easily speak with entrepreneurs and operators. Let us not forget also that the legislative structure and administration are very similar to Anglo-Saxons ones, and consequently easy for us to understand. Finally, I want to point out the importance of the position of India that lies at the heart of Asia and this may enable us to increase our turnover throughout the Far East. “
"Let me speak about a personal experience that is the one for which I was invited to this conference. For several years I have had trade relations with India and I want to point out first of all that the difference in culture, customs, traditions, was not an obstacle in building extremely excellent relationships with the Indian entrepreneurs. I found a serious, prepared, very motivated entrepreneurial class, open to all forms of cooperation and naturally inclined to acquire technology and knowledge. It was possible to conclude agreements in the mutual respect of the rules which have never been disregarded by the Indian party. Let me mention some specific cases, I was able to win, as an Italian company, a major contract with a Filipino business group for the construction of containers beating the Japanese competitiveness through a trade agreement concluded with a company from Bombay, a large metal carpentry, very capable and very prepared, to which I placed an order of 500 containers, which then went to the Philippine company. In the success of the operation, therefore, a significant part was the competitiveness of the Indian company. I have an agreement with a company in the leather sector: the products that I had ordered and that I brought in Italy were not copied for the local market (who has experience with other markets, such as the Chinese one, knows what I mean) and this witnesses the seriousness of Indian entrepreneurs."
"Of course, to get this kind of opportunity I used every means that were placed at our disposal, those of Ice, those of the Chamber systems, those of the Chambers of Commerce and of course the systems of the Associations that are a valuable support to entrepreneurs because, for example, they organized workshops that allowed us to bring supply and demand." "In 2004, we intensified the cooperation with the Indian Embassy in Rome, organising as well a series of bilateral meetings with a delegation of entrepreneurs of the state of Marastra. In October, it is expected a further mission of Indian businessmen that will visit the main districts of the “Made in Italy”. Finally, we are assessing the possibility of organizing a collective exhibition space for farms confederated to us, under the Agrotec fair, the most important Indian trade fair in the food sector and full process."
"It is true that at the moment there are mainly large industries doing business in India, but there are some very interesting possibilities for our small and medium enterprises. Please believe in this market that offers us the greatest prospects and will soon be one of the most reliable markets to which our system of enterprises will turn."

The following speech was that of Dr. Giancarlo Cennini, General Manager of “Flaminia Faber SpA”.
"It is a real pleasure to be here to witness what the Ambassador said in his speech, namely that India is a source of great opportunities for Italian enterprises, especially for small and medium enterprises like Faber, whose General Manager I am."
"Faber is a multinational 'pocket', although it is among the three most important companies in the world production of extractor hoods for household use. In 1955, it invented the extractor hood and in 1986 the decorative hood. Our strategy is designed purely to internationalization. Since the '90s, we are present in many world markets: China (1996), India (1997), Argentina (1992), Turkey (1998) and Russia (2002), where we include production and direct investment. We also have companies in Sweden, France and Spain, and our brands are leaders everywhere we are present. We have 14 plants in the world, producing 2 million and 700 thousand decorative hoods per year, as a group, for a consolidated turnover of about 200 million euros." "Faber has successfully been present on the Indian market since 1997. We had witnessed the process of liberalisation that was present there as of 1991, the economic policy conducted by the Indian government since then has led to a liberalization of industrial licenses, to the opening of capital markets, and an opportunity, for companies in various sectors, to invest in India. "
"The direction of going has never changed, the current Prime Minister and Minister of Finance were the promoters of the liberalisation process in '91 and now India, as well as China, represent an area of greatest potential, with a growth rate ranging from 8 to 10%. Of course, there are still some negative elements, such as excessive bureaucracy in granting certain licenses, permits, transfers of shares etc."
"What I want to understand is why Italian companies, especially small and medium ones, do not invest in India. We consider India a country of great opportunities, where there are great challenges to be resolved, infrastructure deficit, and an agriculture that awaits development, there is a banking system that does not work well, but where lifestyle is growing increasingly modern. There are more and more international brands that offer their own products, and therefore the consumer is increasingly educated to make choices. It is no longer a market of dealers, but it is a market in which consumers begin to compare products. It is not enough to have the connotation “Made in Italy” or “Made in the USA” etc anymore. To sell one must propose quality brands and products. "Lifestyle is changing, but I wonder if all Italian companies make efforts to appreciate this evolution of the Indian consumer. I think that Italian companies are exporting to India, considering it a market of opportunities that can be immediately accomplished and not only a market with a potential development. I think the Italian companies still consider uninteresting the quantities that can be sold or that are exportable on this market at the moment. This is true only in certain areas. When we started, the hoods market was not significant, there were between 20 and 35 thousand hoods. 95% of the consumers did not know what hoods were; today the market comprises 120,000 hoods. We developed; we built our image, adapting our product to the needs of the consumer."
"The attitude of the Italian producers is too obvious. The advantage of going to India, in some areas, is to assert a trademark, so that the product should be appropriate to the consumer and organize the structure. It is necessary that the Italian company that goes to operate in the country should provide products of first range and mid-range, if it wants to be able to expand considerably. It is important that the product should be partly adapted to the needs of the consumer. In our hood, we have changed our entire filtering system. The Indian kitchen and environment are different from those of Europe and of America, so that we had to patent some typical solutions. The company must be willing to invest in facilities, in people. These are my suggestions for a good penetration on the Indian market. A penetration such as that won by our brand: today a hood out of two that is sold in India is Faber, a hob out of three is Faber, and a kitchen out of 4 is Faber. We have a network of retailers that exceeds 100 outlets; we have a franchise network of Faber which covers 20 major cities and we hope to reach by 2010 from 75 to 100 million euros of turnover. We have been successful because the Faber strategy began with a long-term prospect and with the availability of Faber to give maximum support to the Indian partner."

The last entrepreneur to take the floor was Dr. Adriano Doriguzzi, President of Melian Italia SRL and importer to Italy of cars of the TATA group.

"Of course everybody in India knows what TATA is, a multinational group that produces 2.3% of the gross domestic product with over 9 billion dollars in revenues and 225,000 employees. Founded in 1868 by Jamsetji Nusserwanji, TATA group is now made up of 92 companies operating in seven major sectors: engineering, materials, energy, chemicals, consumer products, services, and communication and information systems with the group of support of international operations for all the other groups. TATA is also much loved and esteemed throughout India and this is for the philanthropic actions, of support, not only of their employees, but for the poorest, for the transparency and the professional ethics that are specifically provided by statute. TATA Motors International is a part of the engineering group, our company importing in Italy all light commercial vehicles and motor cars. "
"Today TATA began to be known in Italy, even besides those involved in the work, but when Mrs. Julia Wilson and myself, founders of “Melian Italia”, in July 1994, visited India to sign the distribution contract for Italy, did not imagine that it was only the beginning of a great experience, which witnessed the growth of not only trade relations, but also of friendship and respect between our companies and among all employees and collaborators. "
"In 1994, we had not yet realized how important TATA was in India, while in Europe, it was unknown, we faced our difficult car market with a single aspirated Pick Up diesel model. In recent years, 10 years celebrated this year, in two or three meetings a year that we regularly have with the TATA offices in Mumbai and the factory in Pune, we have witnessed growing the Indian economy and the TATA presence in Italy thanks to the range of vehicles and the constant improvement in quality. One example: in the early years, the car trip from Mumbai to Pune required at least 5 hours along the 250 miles of winding mountain road, then the excellent Mumbai-Pune air links were set up and for two years there is the new beautiful highway with three lanes for direction of driving plus the emergency lanes, only three hours from the downtown of Mumbai to Pune. We also have seen the links around Mumbai changing appearance with the construction of elevated bypasses, bridges, with an impressive acceleration, the same acceleration that characterises the whole economy of India. In the last 5-6 years, the car fleet flourished; the old 1100 black / yellow Fiat cabs, built for years in India under the Italian licence of Fiat, are replaced by the same models of cars present in Europe and Japan, all built in India, and the new models of cars entirely Indian, as the Indian TATA. The success of the Indian TATA on the internal market is incredible: it jumped firmly at the forefront of the sales; it keeps it with the wider range of models and engines available. But the relations between TATA and Italy not only cover the export of vehicles, they have a much broader content, the Indian TATA was designed and industrialized in Italy by the "Studio I.DE.A" of Turin as the cabins of the coming new TATA trucks are executed by the “Centro Stile Bertone”. Some parts of components but mainly machinery for the production and robots were provided by Italy and we have maintained some contacts for the supply of products with high technological content."
"We need to understand that growth in India and in trade with Italy are not a danger to competitiveness with the Italian products, but an opportunity for Italy and Europe to increase its presence in the Indian market, one of the most promising markets, and not only automakers of the coming decades. Trade relations between India and Italy are intensifying steadily in all fields, in the automobile sector, the one I know best, the possibilities are for Italy to export design, technology and projects and import good products at competitive prices. Growth in India is an excellent opportunity to affirm technology, ideas and Italian style in this market constituted of more than one billion people with a middle class in standing growth. "
"It is the Indian middle class that gives greater impetus to growth, almost all European and Japanese industries, including Fiat, are found on the Indian market with the latest and the soundest models of their production, thanks to the gradual commercial opening decided by the Indian Government with regard to products and companies abroad. And competitiveness from abroad has led TATA and other Indian industries to a complete renovation of the range of cars and trucks, also addressing Italian capabilities in design and planning. TATA is thus able to maintain the first place in the domestic market and to export in major European countries."
"In Italy, TATA is present with light commercial vehicles (Pick Up), with a jeep and three models of the Indian TATA along which, at year-end, there will be the station wagon versions with turbo diesel engine and gasoline designed in Europe. TATA has been present in Italy for 10 years, as the TATA industrial relations with Italian and European companies that have witnessed an interchange in continuous growth. TATA is now a brand that is known and appreciated for the available range, for equipment of all vehicles equipped with ABS and standard double airbags with competitive prices. To achieve this result, the excellent personal relations with the Indians have contributed as well, relations that represent the foundations on the millennial history of India, of which part of our Western civilization was also born and that, throughout the millennia, has been charmed, influenced by the philosophy, history and culture of India. I intend to say that dealing with the Indians is easy from a cultural point of view and from the approach to business, it is rewarding because you become friends easily, it is instructive because you see new points of view and learn new philosophies. India is a country undergoing rapid growth, cooperation with Italian companies is a mutual incredible opportunity for exchanging technologically, commercially and humanely. As the Indian Government has taken the road of reform and of opening market access and world investment, Europe should open more their borders to Indian products, starting with the elimination of customs duties and offering its technology for a compatible development of the Indian economy to the benefit of all."

At the conclusion of the Conference, both Arch. Valenti and President Carpintieri, thanking all speakers, stressed the importance of a comparison opportunity like this on economic opportunities and business in India, but they also expressed the hope that the initiative should have effects on the operational plan, as called for in all the interventions.

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