The Council of EU Chambers of Commerce in India (EU Chambers) has organized 25th Annual General Meeting on 19th September 2018 followed by Panel discussionat the Crystal Room, The Taj Mahal Palace Mumbai
On the occasion the Panel Discussion on “THE GLOBAL TRADE WAR: IMPLICATIONS ON BUSINESS”” was organized and was attended by Council’s members, Governing Board Members, Past Presidents, EU & non EU Diplomats, industrialists and bureaucrats.
Mr Ameet Nivsarkar, President of The Council of EU Chambers of Commerce in India welcomed all present. He especially thanked the esteemed panelists Mr. Chandramowli Srinivasan, Finance Director, SKF India Limited, Mr. Robin Banerjee, Managing Director, Caprihans India Ltd. Dr. Vinod Nowal, Deputy Managing Director, JSW Steel Ltd., and Mr. Hitendra Dave- Managing Director & Head of Global Banking & Markets, India, The Hongkong & Shanghai Banking Corporation Ltd.
He also thanked Chief Guest Mr. Suresh P Prabhu, Hon’ble Minister of Commerce, Government of India and Guest of Honour Mr. Raimund Magis, Deputy Head of Delegation, European Union to India.
Mr Nivsarkar briefly highlighted the multifarious activities of The Council of EU Chambers of Commerce in India as one of the foremost trade promotion organizations in India established in 1992 to promote, foster and extend commercial and economic relations between India and the EU. Since its inception, the Chamber has grown in its reach & has expanded extensively and is committed to continue promoting relations and partnerships between the EU and India.
The Chamber’s primary promoters consist of European Bi National Chambers and European Bi National Business committees and its Chief Patron is H. E Mr. Tomasz Kozlowski.
The membership of the Chamber includes representation from several industry sectors – such as banking & financial, infrastructure, automobiles, Pharmaceuticals, electrical and engineering, shipping and logistics, consultancy, IT, Energy, Agricultural products etc. He said the Council has undertaken a number of important activities, which has helped in building the relations between the two regions even further.
The Council has played a pivotal role in assisting its Member Companies to promote trade relations between India and EU. It has successfully provided its members a platform to carry out Business Activities in terms of arranging visits of delegation of Indian companies to Europe and hosting delegations from the European Region, organizing thought leadership conferences, seminars, workshops and facilitating information exchange between Indian & European Companies.
It has been an honour and a privilege for me to serve as the President of the Council for the year 2017-2018 and to lead the Council in playing a key role in enhancing the Bi-lateral relations between India and EU.
Apart from its regular activities, the Council has conducted several events this year with the aim to enhance the ties between EU and India such as:
- Latvia- India Transport & Logistics Conference
- India Trade & Treasury Conference 2018 organized by Global Trade Review (GTR)
- Session on Union Budget 2018
- Europe Day Celebrations in association with The Delegation of the European Union to India.
We were indeed privileged to have Padma Vibhushan Shri. Amitabh Bachchan as a Chief Guest and Guest of Honour H.E Mr. Tomasz Kozlowski, Ambassador, European Union to India. The event was attended by many European companies, EU Diplomats & Non EU Diplomats, Government Officials and Indian Companies. The event was followed by EU cultural programme and Business Delegation to Netherlands, Hungary & Poland
Now, coming to the topic of today’s Panel Discussion ‘GLOBAL TRADE WAR- IMPLICATIONS ON BUSINESS’
In this context, emerging topics are–
Given today’ environment, the topic indeed is very apt. It seems that over 2 decades 20-25 years of a uni-direction move by the businesses towards globalization seems to have hit a speed breaker. Fragmented trade agreements and fragmented businesses probably are the way forward
We will have and seen many symptoms of it be it Brexit, be it some of the political situations which we are seeing a various Countries are the symptoms of this angst or feeling in the local population of that may be globalization has left us out. So how do we as businesses address this we have a great panel here to discuss this and give us insights and I am sure they will do a great job.
On behalf of the Governing Board and myself, I must place on record that the Council has received immense support from EU Ambassador to India H.E. Mr. Tomasz Kozlowski, Ambassador, European Union to India & his office, other EU Embassies and Consul General’s Offices of EU member states at Delhi and Mumbai.
I would also like to thank and express my sincere appreciation to all the Board Members and other member companies for extending their support and cooperation during my Presidentship.
Finally, I would like to acknowledge the good work done by our Secretariat led by our dynamic Director Dr. Renu Shome and her team. I have no doubt, in the coming years Council will scale even greater heights, thus further cementing better trade relations with the EU member nations.
Mr Chandramowli initiated the panel discussion by asking the panelists what in your opinion what are the factors that has led the trade war. The question I would like to ask is it US agenda or US precedential agenda
Excerpts from the speech of Mr. Robin Banerjee, Managing Director, Caprihans Ltd.:
Good evening ladies and gentlemen, I wish I knew the answer I feel this whole trade war actually all know. The trade war is the matter of tit for tat. How does a war start an aggressor makes and aggression and the defender does feels if she or he can win or he needs to defend himself. So it’s a tit for tat how does it all start and whats the reason for that. I feel it’s a personal pride and ego. The starting point is the present president decided it when he went and fought for the election for being a president he had a particular agenda and the agenda was very clear.
Create jobs for locals create jobs for Americans and somehow he turned ups and down the concept of economics and explain to everyone that if everything is made in US and nothing is imported manufacturing will go up and jobs will be created so there was one a promise made by him during election which is keeping two it is his ego because he decided that this is he promise so I must do that and number three inspite of every economist perhaps in the world explaining to him what a lousy policy it is. It is right on the am will come Monday morning 200 billion dollars of imports from China to US will be subjected to 10% additional import duty. There was 50 billion dollar already imposed another 200 billion dollar the president signed yesterday not yesterday on Monday that is coming in whether it is a lousy policy or good policy of course we will decide as we goes by but to my mind I think it is ego and personal prestige of one individual in the world who is taking the globe for granted.
Excerpts from the speech of Mr. Hitendra Dave- Head of Global Banking and Markets, India, The Hongkong and Shanghai Banking Corporation Limited:
I think there is a sense in the world the question is what has caused the US President to come in and the new administration to talk about the things which have actually become quite out of the context of the people 25 years or so. I think there is a growing sense in many parts of the world that the benefits of liberalization and globalization call it what you will have accrued to a certain type of people I think it is really steaming from that part if you are a political candidate who represents a who is not seen as a representative of that 10% or 20% or 30% which is benefited from that last 20-25 years. But is actually reflecting the problems of others who might have not benefited as much that positively or might have even suffered which is how the politicians typically will play out of that angle. So I think it’s really coming from that particular element.
The other element I think whats causing this really is that you have different types of economic systems in different countries and is always easy to see that you are one who is not getting any particular subsidy or any particular benefit but the other is and that theory is easy to play if you just oppose with the initial part when you say that when the wealthier has become wealthier or the people in New York and London has become very well off but you know the middle end of America or the middle ends of UK you know your lifestyle has not really changed because the coal miner or steel worker or an automobile worker hasn’t really benefited as much. I think is a combination of some of these reflecting the angst of the people so it would be little and I think we would be making a mistake if we would just simply say is one man and his vision of the world. So think that clearly causing what caused the recent development that we have seen.
The other of course is that the amount of goods that at least 4-5 major countries import and export has become a very very large as a percentage of their GDP so whether is China or whether it is US whether it is Germany whether it is Japan. I would say these four countries the amount of trade as a percentage of GDP is very high and therefore it is easy to relate to when it comes to the populous as well. So think these two things I would. The second part of your question, I think of course US has an presidential system but it’s an administration decision and the administration is executing it and if you read will realize that actually there are officials in their administrative who are wanting to do even more than just the president. So I really don’t think it is just about one man or so.
Excerpts from the speech of Mr. Chandramowli Srinivasan, Finance Director, SKF India Ltd.:
In fact I had a talk with some people in US and they have actually said that if today presidential poll was held in US again and he would come back to victory so may be what you are saying is right may be not all of them are against what he is doing.
Excerpts from the speech of Dr. Vinod Nowal, Deputy Managing Director, JSW Steel Ltd.:
Totally, I agree with Mr. Banerjee and Mr. Dave, this is basically an election fulfillment or election agenda and the President Mr. Obama is coming from the side of the country where the steel mills are there and coal mines are there to boost the manufacturing, local manufacturing and creating jobs for the USA people. This is the step he has taken by introducing 25% duty on steel items.
Since I am from the steel industry so I want to talk more about that and that has impacted almost you can say 27 million tonnes of steel imports into the US from different countries and the chain reaction of 27 million is almost you can say the China has put some restrictions, Europe has put some restrictions in almost 52 million tonnes steel movement will get restricted and that is going to be create a big confusion in the market. Especially for India I don’t think there will be much problem because we have our own demand and our consumption. We have our consumption but we have to take more precautions from FTA and all whether from the Japan or China FTA means Japan and Korea especially and some measures we have to take against China’s imports also.
Excerpts from the speech of Mr. Chandramowli Srinivasan, Finance Director, SKF India Ltd.:
My second item of discussion is to say that over the years last 20-25 years as you rightly said US has believed in a policy that US will grow by investing in technology becoming the research leader for the world as such and will leave the low end manufacturing more or less to the low cost countries of the world. And simultaneously, as US went on to this journey China took it upon themselves to become more or less the manufacturing hub for the world.
With what is happening now, how do you think this equation will change going forward because suddenly as Ameet rightly said there is a speed breaker now in the global movement that was happening in the last 20-25 years? So how will these both big countries that are today fighting a trade war readjust their strategies that have been their winning strategies that have been there over the last at least 15 to 20 years?
Excerpts from the speech of Mr. Robin Banerjee, Managing Director, Caprihans Ltd.:
The question just asked by Mr. Chandramowli in my mind is the heart of the issue. The heart is like this there are various methods by which an economy can be run and the most popular method which we have all heard and learnt is the Keynesian theory economics. What is Keynesian theory economics say that if a particular area is good to manufacture is more productive in particular in manufacturing a product should produce and sell it and transfer it to a place where it is less productive or less more expensive to make. For instance, if India makes or produces rice cheaper and US produces maze cheaper than US should produce maze, India should produce rice and India should then send rice to US and US should send maze to India. This is the Keynesian theory economics we all studied. Mostly it worked sometime it doesn’t but this is the heart of the story. With this so called protectionism what is going to be the macro impact.
The macro impact is I just said it earlier that 250 billion dollar of imports from China to India will be subject to 10% import duty and come first of January 2019 this 10% import duty will come to 25% this is the change. US exports to China 50 billion dollar, so China already has import duty between 5 to 10% from various countries including exports from India whereas on this 50 billion China will put in this between 15-20% import duty. So that 250 billion dollar worth of trade is going to get affected due to this whole. That is what the impact going to happen US is a 20 trillion dollar economy and in the 20 trillion dollar economy, 250 billion dollar of imports will become expensive, 10% now and 25% after few months. Therefore, theoretically 1% of the economy will only get affected and 99% will still be there.
So the economists says 10% or 25% import duty. So the immediate impact of the GDP growth of the US is likely to be lower by half a percent to 0.7% percent which is not a significant number so while the world is talking about this whole issue of trade barriers and of course today is the talking point of todays’ discussion it is not going to alter the world significantly from this particular angle. Now what will China do, China has only 50 billion dollar worth of imports to play against 250 billion dollar against 50 billion dollars of imports. Anyway China exports 120 billion dollars and US exports 500 billion dollars between the two countries .China will do three things and that perhaps will affect the world in some way. The first for China the US is their banker and that means US is always in deficit and China gives them the money.
China may think that if US is misbehaving I will put the money somewhere else where will they put, they will put to European Union and so the European Union is likely to gain from this factor. Secondly, if China puts the import barriers then imports from European Union and India will go up. China imports about 130 million dollars which they import from US. They can also import from India so there are going to be positive implications for us also. So not all the world is going to come to an end. Yes it’s an impediment but I think we are perhaps over stretching it little bit too far.
Mr Chandramowli asked are you not worried about the contagion effects on other countries
Excerpts from the speech of Mr. Hitendra Dave- Head of Global Banking and Markets, India, The Hongkong and Shanghai Banking Corporation Limited:
I think this will be a country to country issue actually a so got the example of steel where in our probability Indian steel manufacturers might be the beneficiaries of a measure which otherwise a lot of people will think a slowdown growth globally. So it really will depend on which industry one is operating and in which country one is living in but I think what is if this were to go through an envisaged and is still a big if we have to see whether countries able to sit and negotiate once again and that’s what the US has been saying. They are just using this to get people to come to the negotiating table and let’s see how that pans out but if let’s say assuming this we to sustain that barriers or higher tariffs on 200 or 250 billion dollar of goods between US and China, European Union and US similarly other countries step up. And you know India has done something for example in certain products visa viz with US again. I think at a macro level what one should start expecting which is again a reversal of what we have seen in the last 10 to 20 years is a reversal of of this trend of low and moderate inflation at everywhere in the world.
Because what we have seen in last 10-20 years to the opening comment you made that someone would focus on high technology, someone would focus on competitive, basically it was your competitive model that the theory of competitive advantage was that to play certain countries would manufacture cheaper but the idea had to be made somewhere else or the innovation had to be done somewhere else and therefore than they were producing for the world and therefore the world was getting the benefit of economies scale and things like that. If this were to pan out and envisaged and therefore theoretically and I am sure consumers of steel will tell you that the prices of steel in India have gone up because something of that nature and so at the margin. So to the extent of that results in higher product prices and whatever the steel is been used for.
So I think that’s one thing that one would expect. The other for the large corporates I am sure many of them are here and many of them are here in this table also. So eventually, we will all have to really decide our supply chains strategies. I think we have become very used to the fact that you know you finally say Made in made in this country but the reality is that product is made in almost in many cases one doesn’t countries or so when if I should have asked the people here where is Apple phone is made they will say one country but the reality is that’s just where it is finally branded and pushed out but the components there typically and you know more than 70% is not actually not made in the country where it say where it is made in. so I think that’s the other thing the biggest impact of this frankly is not so much on the, there will be the geopolitical and there will be the economic but at the corporate level the real challenge will be and these are not the supply chains and these are not the you cannot change these overnight. You cannot change this on a quarterly basis as well. I think these two things I would say inflation and supply chain management and therefore people who are responsible for those at the macro level and the factory level will have to correct.
Excerpts from the speech of Dr. Vinod Nowal, Deputy Managing Director, JSW Steel Ltd.:
Regarding this technology to job creation manufacturing this has because there was a unemployment was around 10% that has gone down to 3-4% that has given immediate results in USA and that proves actually this is measures taken by the US President was good for the country. Regarding the impact on other countries I think there will be some plus and minus and we have to go for more in micro details some country will gain some countries may get some imposed.
Like in steel we were very much confused when this rumour was there they are going to impose all these things then followed by Europe but end of the day things gets stabilized and a lot of prices has gone up that is not the impact of the announcement of the trade barrier of the USA. It is various reasons because raw materials of all items has gone up whether it is iron or coal. So that is the reason not you can blame only for US imposing the tariff on that but of course there was a confusion there but now the things are settled.
Excerpts from the seech of Mr. Chandramowli Srinivasan, Finance Director, SKF India Ltd.:
Of course the timing of this is also that this has coincided the time when global growth has started picking up again in a sense so it’s a combination of that as well. Another question has this do you think that this will also lead and we have already seen that has happened the effect of this on currencies, I mean the one of the way the Chinese can I am not saying necessarily that they are manipulating their currency but is to say that in order to keep their engines of manufacturing chugging one of the way is to do is to devalue their currency so that despite 10 or 25% duty by US they still keep their exports going. So and that will lead to another bigger contingent effect because currency plays we have seen in the 1998 currency crisis what happened is started with a small currency like the Thai Baht and that had such a big impact on the global currency. If it is something to start with the Chinese Yuan which is a much stronger currency than the Thai Baht because it could lead to another set of problems.
Excerpts from the speech of Mr. Hitendra Dave- Head of Global Banking and Markets, India, The Hongkong and Shanghai Banking Corporation Limited:
I think clearly at least the rupee dollar exchange rate is very topical every time you go home and switch on the television, every time it moves 5 paisa it’s the new high for the week, high for the month, new high for the year or whatever but I think it’s purely coincidental that these stocks of tariffs and trades situations is coinciding with the US economy or may be its not coincidental may be the US president can afford to do these decisions because the economy is quite hot right now. The unemployment rate mentioned here is less than 4% inflation rate is 2 or quarter or so and the fiscal deficit is expected to widen so the monetary policy tightening is turning out to be faster than what anyone thought even a year and a half back. I think there is a sense that the Federal Reserve will not just raise interest rates but will tightened liquidity.
So that’s one part which as a conventional market participant whenever the largest economy in the world. Its only now the China you have reasonably large economy itself but otherwise it was always the case when US raise the interest rates the rest of the world just have to follow and if you don’t follow then your currency is follow and which is what we are going through right now. So part of the currency weakness we are seeing is this and then it gets accentuated with the noise in the financial markets. At this juncture the have real businesses, the real consumers really started feeling the pinch of these things as Mr. Banerjee pointed out 200 billion dollars is frankly next to nothing. It’s almost like the day when FIIs in India sells at 200 billion dollars everyone starts used to start getting you know excited but the actual amount has very little relevance. But the fact that US is raising rates the fact that you have an excitable financial market which doesn’t know or none of us know.
I think even at the end of this panel discussion hopefully we are little bit wiser but most of us really won’t know in which way this is going to be pan out. In uncertainty the dollar’s privilege being the world’s clearing currency really moves in its favour. It enjoys enormous privilege that in times of uncertainty everyone does one thing is that just buy dollars. In fact that happened across presidencies would tell you that there is no change in that mindset. So that’s one part and the other is I think currency devaluation only works only in one country or two country are doing it. If the Beggar-Thy-Neighbor is followed by everyone if all of us weakened together than we are back to the same point. Its causing more uncertainty for the people like yourself who wouldn’t be able to manage your exposures but if everybody weakens together either the one which is not in this case happens to be US will start feeling the pinch very enormously through inflation and through that route so.
Excerpts from the speech of Mr. Chandramowli Srinivasan, Finance Director, SKF India Ltd.:
In fact I mean what you are saying is that Indian rupee has depreciated a lot because but actually if you go and see what has happened to Chinese currency it has depreciated by almost the same kind of so between Yuan and Indian rupee there has hardly been much of movements. So in that’s sense all the currencies has weakened simultaneously slightly up and down a little percentage. But my worry was more this might lead to a new set of devaluation either voluntary or involuntary and that will have its own impact.
Excerpts from the speech of Mr. Robin Banerjee, Managing Director, Caprihans Ltd.:
Most of us here are businessmen and therefore the depreciation of a currency may be it is worthwhile spending another minute or two from my perspective I would like to add. What can China do as I say China of course will impose import duty on 50 billion dollar of import and which will open up some opportunities for countries like India and European Union to export that’s one which we discussed. China will also perhaps not invest in US treasury bills as much as what used to be what will happen they will invest in European Union so that’s another plus for all of us.
But the biggest weapon which China has is they can depreciate their currency by 10% to take care of that 10% import duty hike which will make immediately make the Chinese exporters at par. If that happens just for your information since January Chinese currency has depreciated already by 7% and it has not happened in recent past and has been rock steady. So out of 10% China has already given 7% to entrepreneurs only 3% left and China has enough fire power in terms of foreign currency deposits in their pockets to fight for their time being the foreign currency battle. So I personally believe that expect Chinese currency to depreciate another 3 to 5% implications on Indian rupee of course would happen and therefore Chinese exporters perhaps will not get affected in immediate term.
Excerpts from the speech of Mr. Chandramowli Srinivasan, Finance Director, SKF India Ltd.:
Dr Nowal do you see there is a silver lining in this for anybody at all? For example will other countries like say may be India take some place that the Chinese may have to leave because now Chinese imports into US or become more uncompetitive and therefore do you think there is a play for Indian companies to step into US. We are already seeing that in a little bit in our industry for example but you are from the big steel industry so do you see that there could be end of the day silver lining for the countries like may be India.
Excerpts from the speech of Dr. Vinod Nowal, Deputy Managing Director, JSW Steel Ltd.:
There were two things in this there was hardly any exports from India to US say if you take the commodity of the steel it was more for the Europe and other countries but USA was very low and further this 25% again it will make a lot of impact. You can’t even think of exporting there the same time a lot of demand within India is also there because though we are net importer actually if you see the last upto August it is 3.8% million imports and 3.5% million exports.
Though we are the net importer of the steel but export to USA is not much actually there is not much opportunity for us but for other commodities if any vacuum is there India is the one country who can take the advantage and for that we must prepare all the industries has to prepare for that. But we don’t have as deep the pockets as China as Mr. Banerjee was talking about that they can take more heat because already our depreciation has taken by 20-25% and that is a very big way we are getting impacted our all the industries.
Excerpts from the speech of Mr. Chandramowli Srinivasan, Finance Director, SKF India Ltd.:
May be steel is a bad example because Indian steel has also been subjected to duty by US but there are may be other commodities or other products that Chinese products into US will now become more costly and I am saying may be that gap can be taken up by other countries not necessarily by India but India has a chances as well and the currency depreciation of the Indian rupee probably give exporters another advantage. So this is again something that may be inspite of all the turmoil that is happening there could be some silver lining for some industries.
Excerpts from the speech of Mr. Robin Banerjee, Managing Director, Caprihans Ltd.:
I personally feel that this trade war should be good for India and Europe. There will be pockets of disability for instance if I am importing Harley Davidson into India which is subjected to 100% duty and that’s what it all started. Definitely that will get affected but for instance exports of BMW from Europe, Germany to US, US said no BMW or Mercedes exports I shall not have import duty. For those cars will continue to go but Toyota manufacture for the Japanese market in US will get affected. So there will be pockets of disability but by and large it should be good. I know I am contrary view what we have perhaps been reading and hearing from the televisions but it might give good pockets of opportunities for both the Indian and European businessmen.
Excerpts from the speech of Mr. Hitendra Dave- Head of Global Banking and Markets, India, The Hongkong and Shanghai Banking Corporation Limited:
At least from the Indian perspective from my sense would be that it lets say this trend were to continue and again I emphasis if it’s just the negotiating first step right now then it will a matter of time before other countries so pick and choose certain agreements certain processes, certain conventions and start booking whole into them then it starts its whole liberalization, globalization agenda which we had last 25 years comes to questions. To the extend India has a chronic trade deficit we are the only one which persistently has and on the manufacturing side it is very difficult to see how that will go away. At least in those products for which the domestic demand size is large enough where you will have like mobile phone is an example or an electronic goods is an example things of that nature where the economies of scale now is a very much as possible. There are very few countries in the world which consumes whatever 400 billion mobile phones a year or 300 billion mobile phone a year and similarly you can see it two wheelers and you can see it in another areas where because we have a path of this liberalization a lot of the benefit of increase in demand actually has accrued as much international manufacturers as to domestic manufacturers. So to that extend I think the wider start getting punctured this might be an opportunity country like India and there will be other country so which will use and refix some of these but then at the cost of higher goods to the consumer which is what I spoke about from an inflation perspective.
Excerpts from the speech of Mr. Chandramowli Srinivasan, Finance Director, SKF India Ltd.:
So you mentioned the word if and it’s a big if and that’s leading me to my next question and this is again to all of you more or less do you see when and how this will end and this whole tit for tat that is right now going on and you mention at start Mr. Dave that this is probably more to get China on to the negotiating table rather than really enforce it. Yes we hope that it will happen but do you see timeframe by which this whole thing will come to an end or do you think this will go for the year before everybody comes back on to the table. How do you see that panning out? Individually, each one can have a different view about it of course nobody knows but yours best guess.
Excerpts from the speech of Mr. Hitendra Dave- Head of Global Banking and Markets, India, The Hongkong and Shanghai Banking Corporation Limited:
Let’s just take a look at whats happened you had you know the wall will be built during the election time. There is a wall built during the two countries and everyone laughed it off but obviously that was all not it was a rhetorical statement but the bilateral treaty between the two countries has been really negotiated between US and Mexico there is a new treaty in place which has been accepted by the Mexican authorities and the other parties NAFTA which Canada is increasingly under pressure to be able to do so. So I think since all Government ultimately have do things which are in their economic interest of their citizens. They will choose whatever the next best alternative is. My own guess is next 6 to 12 months you know this will require good mix of public blaster and speak and in the background diplomats and people who are being through this situation.
This will happen in parallel because no country can be seen and leadership can be seen publicly bending to the pressure of international leader even if it’s the most powerful country in the world I don’t think anybody will accept that. You can forget India and you can even sure that even smaller countries will struggle with that so my guess is I think that since economic wellbeing is really now well entrenched in the last 25 years. I mean 200 years back it was just about whether you have a strong military or not now it’s much more about you consumption power or purchase power or so.
So I am assuming that trend is irreversible the fact that people want to live happily, people want to live better, people want to consume more and most political leaders even in non-democracies ultimately have to deliver that if they have to stay. So I am much more of optimist that the end of the day there will be negotiations and retreaties may be all of us end up paying a little bit more may be all of us will end up paying more taxes also. Those are also possibilities which are a result of because overall growth comes down then somewhere the revenue has to come but the optimist in me says when we have the AGM next year hopefully will be talking about the slightly more positive things and outlooks.
Excerpts from the speech of Dr. Vinod Nowal, Deputy Managing Director, JSW Steel Ltd.:
In my own opinion this is the peak actually I don’t think it will further widen the gap but after this elections are over things will get settled it looks like that.
Excerpts from the speech of Mr. Robin Banerjee, Managing Director, Caprihans Ltd.:
My view is that the dispute is already started it’s not correct to my mind to say that it is it on Monday 10% import duty is getting added on the 200 billion dollar the President of America has passed an order what is the if is 25% may not happen in January and that’s where I am optimist in that America is a democracy and the politicians depend upon the views of their people and therefore they can ill afford to enhance the price of the imported goods on which duty will be 25% on popular good like say fruits for it’s a large quantum of fruits they import from China, vegetables they import from China. So and I think all of us the mankind is very intelligent to understand that they shouldn’t do something which adversely affects the world. So while the 10% happens 25% perhaps will not happen and that’s my take as of today.
Excerpts from the speech of Mr. Chandramowli Srinivasan, Finance Director, SKF India Ltd.:
I would like to come back to your point Mr. Dave about even small countries nobody wants to be seen today as a weak country bowing down to the weak country and of course China as a huge super power country today and politically they also cannot be seen to bow down to the pressure of the US and I agree with your views. So these are really two big economic and political super powers neither can be seen to be the first one give an inch away and therefore the worry is that this will continue. In fact, so many days we see that one day the stock markets are up because they are rejoicing the fact that probably it looks like it has going to be a breakthrough.
Than very next day it goes back and says no its gone up again the tensions of trade wars has gone up again. So it’s really extremely volatile right now and probably only thing constant about the fact that its unpredictable that’s the only constant I think. This is to Mr. Dave again being an MD of HSBC which is a European Bank anyway. Where do you see the EU on all this we are seeing US strong power, we are seeing China strong power and more or less their entire talks are around what US and China are doing to each other more or less? But we have other strong power in the Euro zone we have Germany, we have the other pie and we have the entire European Union as well.
Where do you see them in this whole play I mean do you see them playing a mediator role to try and calm things down between these superpowers because at the end of the day nobody wants I mean everybody wants world peace so they all are united together and trying to get North Korea to the table and probably the US president managed to do something on North Korea front but when the trade wars took over. Where do you see the EU it’s a very important zone in the world as well.
Excerpts from the speech of Mr. Hitendra Dave- Head of Global Banking and Markets, India, The Hongkong and Shanghai Banking Corporation Limited:
I think there is a sense that if there is a leadership vacuum which is getting created because for the less phase for the last 40 or 50 years the world has simply accepted US as its natural leader from values, ethics, political development every form of leadership actually was and I would almost think rightfully taken by US given what they have been doing to their economy and doing to their people. Given recent development there is a sense of thought there is a bit of vacuum out there whenever you have vacuum you will have scope for some countries to try and see if they could get in there. You had Mr. Junker I think last week talked about the fact that why is it in Europe we are pricing goods in dollars when everything is getting done in Europe or in Asia.
It does seem quite ridiculous that you are pricing those in dollars. So things like this would not even uttered a few years back or so. I think clearly Germany whether it is really robustic economy and a very stable polity and no real issues to contend with. So I think one impact will be clearly at the leadership level. So do you become a person who somebody can call and say help me out here whether it will be China, US whether it will be under normal circumstances you might even have UK. But UK is going through its own challenges, so I guess it is preoccupied with their own internal challenges right now.
But clearly I think if full scale things were to go out then EU is a very large exporter and the most powerful country you are most powerful economically prosperous country in EU will definitely have to do something because the individual countries just don’t have enough of the market and the whole idea is that you know for certain products Germany, France, or Italy and places like that are manufacturing for the world if they are manufacture for themselves and even for the EU market is not large enough. It is also not a growing market, it is also not a young market so EU whether its likes it or not will get caught up in this process and therefore I suspect the thinkers there are preparing for the vacuum and preparing for how to occupy that space.
Excerpts from the speech of Mr. Raimund Magis, Deputy Head, Delegation of European Union to India:
Good evening the excellencies ladies and gentlemen and above all the President of the Council of EU Chambers of Commerce in India Mr. Nivsarkar and as well as the incoming President Nicolas Simon. The panel discussion was extremely interesting for me to listen to and I think we could have chosen a better theme than that we are tonight unfortunately I do not quite share the optimism of some of the panelists expressed here in this room and let me just show you that the ongoing trade war we see escalating in rather rapid pace between the United States and China we sure we see that with great concern there might be certain opportunities for the European Union in that however we are concerned about is much more the bigger picture in fact this seems to be only a symptom of much more dramatic changes in the international world order as we are looking at. It seems that the whole world is going through dramatic changes where people lose faith in institutions where they use where they lose faith in the world order as we know today and where there is a broad sentiment that multilateralism is may be not the answer anymore to our dealings or the way we should address challenges where free trade is considered to be may be a game where we might be losing out and where other values systems beliefs including universal role of law human rights are considered to be something that can be negotiated in a certain way we see these developments with great concern and actually our Vice President and so called Foreign Minister Federica Mogherini she said a few weeks ago the very idea of multilateralism is being challenged more every day we do not deny that there are problems in this world we do not deny that the very important demographic developments that have given rise to international tensions let you phenomena like migration mass movement in the world there are tremendous issues challenges as far as environmental concerns are concerned climate change but also extremism and there is a rise in intensions civil war and strife.
However, we believe that these challenges can only be met in a multilateral systems only through cooperation and in fact at the last EU Ambassadors conference only two weeks ago where the Ambassadors of all the EU delegations and the world came to Brussels to discuss with our political leaders challenges possible solutions was also key messages to the world we formulated about three key messages that would I would like to pass on to you one is there is a very strong sentiment in the European Union that we have to work together with partners to address these challenges which I just mentioned the multilateral system is the system in which we want to operate and we want to work sure enough there is room to enhance its efficiency but at the end of the day only in the multilateral system within the rules based system we will be able to negotiate effectively solutions that can be implemented and can be worked for all of us.
Secondly, we believe the way we want to deal with our partners can only be done in the spirit of partnership in the spirit of mutual respect and very much in the spirit of let’s say trust we don’t believe in strong handed politics where let’s say trust we don’t believe in strong handed politics where let’s say like the strong guy takes it all this can only lead to conflict of tensions to problems this is something deeply ineffective and very much undesired from our point of view and lastly despite all the problems that we have in the European Union ourselves challenges adaptations to the other ever changing world I don’t want to even go too much into B word Brexit and so on.
EU is definitely not withdrawing from the world stage the times where we have been consumed by discussion on our destiny are over we have realized if we do not take our destiny in our own hands will be losing out and we can only protect ourselves by engaged in even stronger with our partners with our strategic partners and among them definitely India is going to play a very important role so see more of the European Union in the international debate see more of us in international cooperation including peace and security economic governance but also protection of global goods including our climate.
In this context the EU India summit that we had in October last year is I think giving a very good example and is also a very important event. Education of that summit our political leaders confirmed that the EU India we have in both the same outlook on the world we have the largest democracies we believe in a rule-based international order we believe in the international peace and stability we believe in the protection of global public goods. Our leaders recognized that in pursuit of these beliefs we should actually work much closer together we have been working ever since in to forge our deeper and ever deeper bilateral partnership concrete actions have been done.
I just want to mention a few of the directions where we have been working closer together we have been expanding our partnership in the field of foreign policy and security and we have a number of dialogues going on addressing issues such as maritime security, Afghanistan. We have been discussing on a regular basis issues pertaining to Iran so there number of issues where we see eye to eye and we have common interests and we actually can benefit a lot in our cooperation.
The second fields we have been working together very closely is the increased EU support for India sustainable modernization these are number of areas which have also been mentioned by some of our panelists including circular economy, resource with efficiency, water smart cities urbanization in general clean air and off course one very important field that we will be working together is every closer trade and economic relations. We have increased and stepped our cooperation in the areas of research and innovation with very important calls for joint research projects. European Investment Bank has stepped up its investments in India for metro in Lucknow and Bangalore, to giving lines of credits to banks particular support middle mid-sized companies and last but not the least of course we want to forge ever close ties to people-to- people contacts this is a very important part for our mutual understanding.
Let me say a few words on expanding trade and investment ties. The EU is India’s largest trading partner in goods and services and this will even remain so after Britain has left the European Union. Bilateral trades in goods and services well beyond the mark of 100 billion Euros and more than 6000 European companies have set up shop here in India giving more than 6 million Indian
jobs and mostly of them are skilled jobs so the EU is a very important investor and provider of know-how and expertise and technologies here in India. We have launched an investment facilitation mechanism to facilitate investments by European companies here in India and we taking forward actively our discussions on a possible free trade agreement and investment protection. Allow me to say a few words on the Free Trade Agreement. In the past weeks and months chief negotiators have met frequently and also experts have met on a regular basis to discuss a number of issues we are currently in the phase where both sides are assessing the outcome of these discussions whatever the decision will be how are we going to deal with this Free Trade Agreement one thing is for sure the EU remains committed long term into free trade and into a Free Trade Agreement with India and no matter whether we going to have this agreement now a later we will work tirelessly together with India to advance our Free Trade or trade agenda with the Indian side and to improve our investment cooperation with India.
Allow me to say a few words on sustainable modernization only two weeks ago commissioner Karmenu Vella was here accompanied by 80 companies. The key theme of this mission was circular economy and European companies took centre stage in our discussion with more than four Indian minister’s and how to bring European technologies to India.
I believe there is a huge potential for the European Union and its companies incorporating here with India this will be not just simply bring European technologies to India but adapting them to the Indian market, working together with Indian partners and make them fit the Indian situation.
Lastly, cooperation in research and innovation I think there is incredible talent in this country and our interest is very much to invest here, invest in education here in India and to facilitate mobility of Indian researchers to EU in order to conduct research at our institutions jointly with our researchers in order to find solutions which are beneficial to both the European Union and India. There is tremendous potential in that field of cooperation and of course cooperation on global issues while a lot of talk has been there about kind of like what value is there and climate change even doubting the benefit of fighting climate change.
I believe the recent summer in the European Union which was particularly warm like the fourth warmest summer on record in history for everyone. We have to step up the fight against climate change we have to step up the fight for global pubic goods together and we are very much determined to work with India together in that field. There was also from one gentleman mentioning of the WTO let me state that we are very clearly we are very much in support of the WTO it is the only rules based organization that we have to protect international Free Trade. Weakening this organization we believe is a huge mistake and we want to work together with India actually to support the WTO to modernize it in a way to reform it in a way then it becomes again the organization we all would be looking for and to defend Free Trade.
Ladies and gentlemen let me assure you that the EU is very much interested in further strengthening its ties with India we are doing that with very concrete measures and actually for the first time ever in few week time only we will launch a new strategy by the European Union for India which will define the way we will conduct business in India it will be a very broad based strategy covering all aspects from foreign security to trade to investment to green economy and we will conduct the relations for the extend to the 15 years. In addition to that this morning the European Union has launched a new strategy defining the connectivity between the EU and all of Asia. This vision or this strategy is encompassing everything in the field of content of connectivity not only transportation but also digital human aspects and in contrast to may be some other connectivity strategy that might be you that might be aware about it is based on rules based approach it will be comprehensive and it will be something done in partnership and particularly in partnership with India which is a pillar of that vision.
Let me come to a conclusion we very much believe in rules based multilateral system not only trading system but a system of global governance and we believe that India is a natural partner of the European Union in that respect. We don’t only do that for let’s say short term business prospects but we do this very much in order to protect the way we live and the protect we want to conduct business in the future for this generation but also for future generations to come and that’s in that sense I would be very much like to congratulate you on the deliberations we had today and it was very interesting event and I am very much looking forward also to engage with you in future.
Excerpts from the speech of Vote of Thanks by Mr. Nicolas Simon, Incoming President, The Council of EU Chambers of Commerce in India:
Good Evening Ladies and Gentleman!
On behalf of the Council of EU Chamber and my own I thank our Guest of Honour: Mr. Raimund Magis, Deputy Head of Delegation, European Union to India for being here with us today at the 26th Annual General Meeting of the Council of EU Chambers of Commerce in India.
My sincere gratitude to our Moderator Mr. Chandramowli Srinivasan, Finance Director, SKF India Ltd., Panelists Mr. Robin Banerjee, Managing Director, Caprihans India Ltd., Dr. Vinod Nowal, Deputy Managing Director, JSW Steel Ltd., Mr. Hitendra Dave, Managing Director & Head of Global Banking & Markets, India, The Hongkong & Shanghai Banking Corporation Ltd.
I gives me immense pleasure to inform you that the EU Chamber has undertaken many programmes in the past year for its members, with the purpose of getting the industry together and sharing its common view with regards to promoting trade and commerce between India and European Union.
Friends, we assure you that the EU Chamber will always strive to promote the trade relations between both the regions and undertake many such activities which shall help our members to know about the latest happenings with regards to EU India Trade.
We at The EU Chambers were pleased to organize for you, this Panel Discussion on “THE GLOBAL TRADE WAR: IMPLICATIONS ON BUSINESS” which is a very topical subject.
I sincerely thank our today’s sponsors for making this event successful:
Gold Sponsor: ICICI Bank Ltd. Silver Sponsors: Tata Consultancy Services, NRB Bearings Ltd.
Whistling Meadows Resort & Lawns, Naresh Enterprises, Flywell Aviation Pvt. Ltd.,Seahorse Ship Agencies Pvt. Ltd., Tata Chemicals Ltd., August Consulting India Private Limited Beverage Sponsors: Aspri Spirits Pvt. Ltd. , United Breweries Ltd. , Pernod Ricard
I would also like to thank all the press and media representatives present here today.
Also my sincere thanks to all our member companies without whose participation Chamber cannot function.
Lastly my duties would be incomplete, if I do not acknowledge the hard work of the Secretariat led by our dynamic Director Dr Renu Shome for putting up this wonderful event for you.
Ladies and Gentleman, once again I would like to thank all of you for gracing the occasion and hope you will enjoy the Evening as much as we have enjoyed organizing it for you.