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‘Luxembourg is keen on correcting trade imbalance with India’

Bilateral trade between India and Luxembourg is currently not only very insignificant but also unbalanced. However, recently, Luxembourg has evinced keen interest in building a strong trade relationship with India which can explore this strategic location for enhancing access to the European Union. In an exclusive interview with Arbind Gupta, His Excellency, Paul Steinmetz, ambassador of Grand Duchy of Luxembourg in India discusses various critical issues pertaining to bilateral trade between the two countries. Excerpts

What is the current status of the bilateral trade between India and Luxembourg? How can this trade which is at a very low ebb presently, be boosted to a sizeable level?

You are right. The news on this front is not so good. The bilateral trade between India and Luxembourg is not only small but also unbalanced. Exports of Luxembourg to India last year were about 12.5 million euros only (Rs 50 crore), while India exported 7.50 euros (Rs 28 crore) to my country, with little upward movement over the last few years. The imbalance is mostly due to growing success of Paul Wurth (PW), a Luxembourg company specialising in machinery and equipment engineering for upgradation of steel furnaces. PW has become a prime contractor to SAIL, Tisco, Jindal and others. India’s requirements of metals, plastics, rubber and some jewellery and gem stones are also attended by Luxembourg exporters. Exports of India to Luxembourg cover more traditional items like textiles, base metals, leather items and vegetable products. But we also import machinery and equipment and a certain range of plastic and rubber from India.

Judging by these figures, I will work towards first increasing our bilateral trade globally, while also encouraging Indian exporters to explore more thoroughly Luxembourg markets. With globalisation, distinctions have anyhow become rather fluid. Increase in exports from home country often develops into investment into target country, but this investment may in turn induce more exports from home country. Therefore traditional limitations upon a diplomat’s mission such as promoting exports from home country and investments to home country only have been overtaken. For example, Tradearbed, the trading arm of Luxembourg steel giant ARCELOR, set up an office in India initially to boost Luxembourg steel exports. It ended up selling steel from India to China and US, therefore helping India’s steel industry rather than Luxembourg’s!

Trade can be boosted by visits of businessmen from both Luxembourg and India, which are currently not sufficient. Both the governments, chambers of commerce and trade bodies like NASSCOM or Belgian Chamber of Commerce and Industry can play an important role by organising these visits. There are a large number of important trade fairs held in Luxembourg which would be interesting for Indian industry, since we are at the heart of the European single market. Similarly Luxembourg companies would also be encouraged to participate in fairs in India.

Please specify the measures that have been carried out by your side recently to enhance the trade relationship with India?

The government of Luxembourg opened a trade office in New Delhi in 1997 which laid the foundations and helped put Luxembourg on the map. On February 28 this year, I opened the embassy of Luxembourg in New Delhi. This by itself demonstrates the importance we give to enhancing of our bilateral relationship, political and economic. Trade shows have taken place in the past, in Delhi, Mumbai, Chennai, Bangalore and Hyderabad. Both our prime minister and deputy prime minister visited India. The Indian president and ministers of important economic ministries and also industries like steel have come to Luxembourg. These visits naturally stimulate trade. We will pursue the good work done by the trade office in this regard.

Moreover, now we will aso appoint honorary consuls in Mumbai and Kolkatta, adding to the one in Chennai. We are working on a more focused trade mission in early 2003 by our deputy prime minister and foreign minister, Ms Lydie Polfer. We are talking to Indian government as regards a double taxation agreement to put Luxembourg exporters on a level playing field with their European competitors.

Kindly mention the areas where Luxembourg would like to enhance its trade linkage with India. Besides, the areas of common interest for both the countries.

The steel sector is and will remain important for Luxembourg. Steel has always been the number one industry in my country under the Arbed trademark developed last year into a French-Spanish-Luxembourg multinational - ARCELOR which headquartered in Luxembourg, is now the world’s largest steel company. Since India’s steel industry will most probably not only modernise but also expand, there are common interests, through joint investments and common projects. Other industrial products from Luxembourg are often manufactured by international players which have their own worldwide sales strategy (Good Year, Dupont de Nemours, TDK, Guardian, etc). They do not generally ask for embassy help. Many other Luxembourg companies, however, are small or medium-sized entities and have developed niche products, mostly in the hitech sector. Most of these products happen to be of use in the automobile industry - thermostats, battery parts, electronic sensors, carpeting and isolation material, treadwire, mini-refrigerators, testing facilities for car electronics and aerodynamics, etc would be of interest to India. Judging by the remarkable growth of India’s automobile industry, I see many possibilities. These companies tend to ask for embassy help indeed. I shall concentrate on them.

Promotion of Luxembourg’s financial sector is of lesser importance since again its banks and insurance companies are wholly-owned subsidiaries of foreign financial institutions and these players have their own global strategy. However, more investment funds are now located in Luxembourg than in any other nation in the European Union. Hence with liberalisation of the financial sector, this industry might become of interest to India. Also of note is Luxembourg’s efficient and competitive stock exchange, where many of India’s biggest companies have listed their GDRs.

Luxembourg also provides air services and boasts of Europe’s largest all-cargo airline, Cargolux (12 jumbo jets). Chennai is the India hub of Cargolux and has twice-weekly flights. Many Indian freight forwarders, mainly from the south, work with this airline to route their European exports efficiently and rapidly. My country is host to two of Europe’s media giants, RTL Group (now owned by Bertelsman from Germany) and more importantly for India SES Global, a world embracing private satellite operator. My government doesn’t believe in state television or radio. It therefore supports private media ventures and Indian companies which would like to take advantage of a liberal telecommunication environment within the single European market designed to open opportunities and reduce operating costs are welcome.

Last but not the least we would like to tap into the Indian outbound tourist market. My country is only two and a half hours away from Frankfurt by scenic train (or 25 minutes by plane). We are promoters of so-called green tourism, rural based and family oriented. For instance, the government has developed a unique network of interconnecting bicycle roads on the tracks of what used to be a 19th century narrow-gauge railway. Rock climbing and river navigating are other sports. Or you might just relax and visit medieval castles or else sip our famous beer and/or white wines in taverns and Michelin-starred restaurants.

Since the beginning of the liberalisation process in 1991, many European countries have made their presence felt in the Indian economy in terms of joint ventures, direct investment etc. But Luxembourg has not been very proactive in this regard, why?

In fact, Luxembourg companies, like Paul Wurth has been present for 20 years, well before liberalisation. PW has played an important role in the upgradation of Indian steel industry. As I mentioned before, Tradearbed is present too (Delhi), as well as Cargolux (Chennai).

I know of at least two other companies from Luxembourg which are on the lookout for investment opportunities. One in the powder metallurgy sector and another one in the pulling equipment business. We are also in close contact with the two dozen or so Luxembourg companies which are exporters to India, with a view to increasing their presence here.

I do believe that if markets grow and liberalisation continues things will happen.

Don’t you feel that there is need for more interaction between both the sides as this will enable entrepreneurs of both the sides to know each other and develop a relationship of trust and cooperation for growth of trade in future. What role can Indo-Belgian Chamber of Commerce play in this regard? And how will your trade commission take up the whole issue?

Interaction has already been encouraged by having visits and holding regular seminars by the trade office. Events like LuxAsia 2000 were held in Luxembourg in which many Indian companies participated. But you are right: we must set up a network of contacts, through nodal points, which would mainly be our former and new honorary consuls and Belgian Chamber of Commerce all to be coordinated by Trade Office with global supervision by Embassy in Delhi.

How do you feel India as a country for investment by Luxembourg companies? What are the measures you feel that the Indian government can take up to catalyse the entire process?

Luxembourg definitely feels that India with its competitive advantage, low inflation rate and steady growth provides a favorable climate for investment. Our companies especially in our core sectors of steel and automotive equipment are looking at the opportunities provided by India as they tend to look East in order to diversify markets. However this process may not be immediate but would follow as a natural consequence of increase in trade. The Indian government and India’s states can stimulate investment by ensuring better patent regime, signing non double taxation agreements and removing obstacles like large amount of paperwork and cumbersome regulations. Single window system for project approvals, open and transparent government decision making, simplification and stability of regulations, increase in infrastructure investment are all measures which outside investors are keen on. Investors from Luxembourg are no exception.