My India 6: "Beyond the Euro Crisis"
In "My India" Ambassador Stoelinga this month tells about how Indo-Dutch cooperation can benefit the competitive strength of the Netherlands' economy.
In the beginning of December good news arrived for the Dutch: after seven years of economic stagnation, we can look forward to “normal” economic growth figures in 2015. But the newsreader had a caveat: the competitive strength of the Netherlands’ economy is under pressure and for an economy, which for 50% depends on international trade, that is a worrying signal.
From New Delhi of course I look at what role our economic relation with India could play in keeping our country in the lead pack of economies. And that role is more obvious than you probably would imagine.
“ India is not a second China ”
To create business between India and the Netherlands, our Embassy not only has to sell the Netherlands in India, but we also have to sell India in the Netherlands. Because, when Dutch companies think of Asia, they think of China. China though, is mainly important because of the huge volume of imports we receive from that country. With their economic and monetary policies the Chinese were able to lure away a large part of production capacity from the West. The world had been flooded with cheap Chinese products. So much that it was one of the factors for low inflation in the West during the past decade. Now the Chinese leadership changed course (and the domestic demand in China becomes the priority for growth) investors will look for other low labor cost countries. But they will not be coming to India in great numbers.
One of the reasons is that India is not a country where you can just establish a production plant in a short time. In some cases, lack of necessary reforms also makes India an uncertain destination for investment.
But even when these temporary obstacles have been resolved, still India will not become a second China. And India does not have any aspirations either to follow the footsteps of the Chinese. For the Netherlands there are some implications:
From mid-2012 the Netherlands Embassy in New Delhi stepped up its efforts to convince Dutch universities of the importance of setting up structural collaboration frameworks with their Indian counterparts. And these efforts were not in vain. An increasing number of Dutch universities came to New Delhi, Bangalore, Pune and Calcutta and a basis for partnerships has been laid. What impressed the Dutch universities in particular is the considerable R&D capacity, which is being installed in India. “We can only dream of that”, said one of the deans. On top of it, every year half a million engineers graduate in India, math’s being in the genes of the population. All large -also Dutch- international corporations- have R&D centers, of up to 1500 engineers each, in Bangalore. In Pune highly qualified science graduates began start-ups, which develop critical software for Pune based international companies. In a couple of years India will play an important role in developing new concepts, products and solutions and the Dutch universities should be connected to this development.
We see the same trend with Dutch companies, also SME, which in order to be able to continue to play at the international level, seek for partnerships with Indian entrepreneurs. It often starts with a simple outsourcing relationship and evolves into a strategic partnership. For some Dutch companies the collaboration with the Indian partner has become critical to the survival of the company, even in its own Dutch market.
Conclusion: the business relationship between Indian and Dutch companies is not any more a question of: I export to you or you to me, or I outsource to you or you to me, or I transfer know how to you or you to me, or I invest in you or you to me. It is a question of companies positioning themselves in each other’s continents (Europe, the India sub-continent respectively) and by doing so become or stay competitive at the international level.