The New Zealand India Business Relationship

Good afternoon and thanks for the invitation to speak today.

Although outwardly very different countries India and New Zealand have a shared heritage which provides a good foundation for strengthening future relations. Both countries inherited the Westminster system of parliamentary democracy from Britain (although we’ve modified ours), are still members of the Commonwealth and there is no language barrier as English is widely spoken in India. Most importantly we share a love of cricket.

However India-New Zealand trade is still fairly modest. For the year to December 2001 New Zealand exported $166.2 million of goods to India. Wool accounted for about a third (34%) of those exports, logs 14%, leather and hides 10% and butter 9%.

In the same year we imported $188.5 million worth of goods and services from India. Linen, medications, diamonds, textiles, clothing and footwear are our main imports from the sub-continent.

This represents only about 0.5% of our international trade. India is our 12th largest export market in Asia behind much smaller countries such as Vietnam and the Philippines. Given its vast population, of more than a billion people, and the fact that it is the fifth largest economy in the world, India presents huge business opportunities for New Zealand.

India is also undergoing a period of rapid economic growth. It’s GDP growth has been around 6% per annum over the last few years and is forecast at 4.8% for 2002. Since 1996 there has been a gradual lifting in investment and trade restrictions, which means that the Indian market is now at its most open in modern times.

Reflecting the greater importance New Zealand is attaching to its relationship with India, there has been a sharp increase in high level visits between the two countries. I had the privilege of spending a week in India in December last year. While there I spent time in Mumbai, Bangalore and Delhi and met with a range of politicians and business leaders.

India / NZ Joint Business Council

The establishment in 1988 of your organisation, the India / New Zealand Joint Business Council, was an important catalyst for New Zealand and India’s bilateral relationship.

While in India I attended the 10th India-NZ JBC meeting in Dehli. The more than 80 delegates at the meeting noted that while trade between the two countries has grown in recent years there is scope for further expansion.

A number of areas were identified as being suitable for joint venture projects. These included food processing, fisheries, infrastructure (particularly highways, ports, telecommunications and hydro power), education, tourism, dairy products, software, consultancy and timber and wood products.

Barriers identified included high tariffs and the continued restrictions on the use of radiata pine in public buildings in India. The meeting noted that India is committed to ongoing tariff reductions to bring its rates in line with South East Asia.

Timber / Wooden Houses

There is potential to expand New Zealand’s timber exports to India, although there are issues around Indian restrictions on our Pinus Radiata.

At a meeting in Mumbai with Chief Minister of Maharashtra State, Vilasrao Deshmukh, I discussed India’s recent decision to enrol all children at school by 2003 and suggested that wooden classrooms from New Zealand, could be used as temporary low-cost accommodation to cater for the increase in children attending school. I also discussed this issue in a meeting in Bangalore with the Chief Minister of Karnataka State, Somanahally Mallaiah Krishna.

As a result of these discussions TradeNZ is working in conjunction with Fletcher Challenge Forests to provide proto-type classrooms to India at extremely low-cost, for assessment by the Indian government. Consideration is also being given to the use of timber structures as temporary accommodation for slum dwellers.

I understand work is continuing on this, but there is a sticking point to do with the perceived danger of fire with wooden buildings. Fletcher Challenge is currently looking at fire proofing solutions.

Film & Tourism

The use of New Zealand as a location for filming by the Indian film industry has emerged as a serious business. More than 60 Indian film crews have traveled to New Zealand since 1998. This has a positive spin-off for tourism as well. Indian visitors to New Zealand grew by 50% for the year ended December 2001 with more than 12,000 arrivals.

At my meetings in India I took the opportunity to promote the Lord of the Rings films as an example of New Zealand’s expertise in both film and IT. Spin-off from Lord of the Rings could result in business opportunities for New Zealand and I have since met with the Wellington-based Capital Creative Cluster – a group of multi-media companies – and have encouraged them to follow up on these opportunities.

At a meeting I had in Mumbai with the Federation of Indian Chambers of Commerce it was suggested that, given the interest in New Zealand as a film location, that New Zealand set up a production house for Indian films.

I understand Film NZ has supported two locally-owned production servicing companies which cater to Indian film production. However so far there has been no move to set up a production house exclusively for Indian film.

IT

India is one of the world’s IT powerhouses and there are many opportunities to improve links between the Indian and New Zealand IT industries.

While in India I signed a bilateral agreement for IT cooperation with my counterpart the Hon Pramod Mahajan, India’s IT and Communications Minister.

The agreement recognizes the potential for extensive trade between the two countries and acts as a catalyst for greater business links. We have agreed to exchange information on legal, regulatory and policy approaches and industry development issues. We have also agreed to discuss issues such as public key infrastructure, intellectual property rights and digital signatures.

A number of areas of common interest were identified in the agreement. These included: software and multi-media content development, advanced communications technologies, internet applications, e-commerce consumer protection policies and cross-border issues such as cyber-crime and IT security.

In the year since the agreement was signed the Ministry of Economic Development has been in communication with the Indian Ministry for IT and has exchanged a range of information.

As Minister for information Technology I visited a number of Indian IT companies.

In Mumbai I visited KarRox Technologies, the largest provider of high quality IT training in India. KarRox operates a joint venture company in New Zealand (KATL) with the Auckland Institute of Studies. The company intends using New Zealand as a hub to launch its training programmes into China, Taiwan, Korea and the Pacific. KarRox intends targeting Maori students and is in touch with the Waipereira Trust in Auckland.

Currently KarRox is reconfiguring its products for the New Zealand market. Work on expanding into China is continuing but at a slower than hoped for rate because of different rules and governance structures in different parts of China.

I met with a number of companies in Bangalore – the IT capital of India.

At Tata Consultancy Services (TCS) – India’s largest IT company, I was shown the company’s International Technolgoy Park, which offers a complete live work and play environment for tech-savvy companies.

TCS is very keen to do more work in New Zealand, particularly government work. It has already done work for the Social Development Ministry, the NZ Dairy Board (now Fonterra) and Tower Insurance.

Since my trip, the CEO of TCS visited New Zealand in February and March of this year. TCS has one New Zealand representative and has picked up two more New Zealand clients this financial year.

I also visited Infosys, India’s second largest IT company. Infosys’s interest in New Zealand lies in the e-government area.

At Wipro, India’s third largest IT company, the discussion centered around the challenges for New Zealand companies wanting to enter the Indian domestic market. Wipro was interested in taking a brokering role for joint ventures with New Zealand. The NZ Trade Commissioner put together a number of proposals to Wipro for further discussion.

At a meeting in Bangalore with Professor BK Chandrashekar, Karnataka’s Minister of State for IT, the possibility of a twinning relationship between Wellington and Bangalore, to build on the IT capabilities of both cities, was raised.

Education

The NZ-India Education network, set up in conjunction with TradeNZ, held its first fairs in Chennai, Mumbai and New Dehli in November 2000.

The fairs seem to have had some impact. In 2001 approximately 1,300 Indian students came to New Zealand to study, compared with 256 in 2000.

While in Dehli, I visited the Delhi Indian Institute of Technology. There are six IITs in India, which focus on science, engineering and technology. While at the institute I raised the possibility of study and research exchanges between the school and New Zealand. Some discussions had already taken place between the institute and Waikato University.

Agriculture

There is great potential for more agricultural trade with India, particularly for New Zealand to provide food processing technology. New Zealand currently exports small volumes of kiwifruit, apples, lamb, beef and salmon to India. India currently enforces high tariffs on New Zealand apple exports and this was discussed at my meeting with India’s Commerce Minister Murasoli Maran.

Conclusion

There are many areas where India and New Zealand can expand their trade. Some of the most exciting of which are in sectors such as IT, film, forestry and food processing. The frequency of high level business and political visits and exchanges is also increasing, which is good to see. New Zealand’s large Indian community means it is well placed to strengthen links.

India is the second largest country in the world and its liberalization and privatization policies are creating more opportunities. I’m confident the India New Zealand relationship will go from strength to strength.