European Business Group Lunch Meeting; Mr Erkki Liikanen, Member of the European Commission, responsible for Enterprise and the Information Society; New Delhi, 25 March 2004

"The competitiveness of EU Industry in a global economy: implications for our relationship with India"

Ladies and Gentlemen,

It is good to back in India. I am looking forward to spending a couple of days here in New Delhi to see my Indian counterparts, and industry players from both Europe and India to discuss ways of promoting our bilateral relations and industrial cooperation.

In particular, I am looking forward to visiting and participating in the Euro-India Co-operation Forum on the Information Society and I hope that many of you will do the same. This event is a good opportunity to explore ways to improve cooperation in an area which is so close to the hearts of both Europe and India namely research in the technologies of the future. This is crucial to the competitiveness and productivity of both regions. If we combine forces I am sure that we can generate a genuine win-win situation.

In Europe, we have lived through a difficult time over the last few weeks. The tragic events in Madrid sent shock-waves around the globe. They have once more demonstrated that we are all vulnerable to terrorist attacks and that this threat is one of the most serious challenges that face us all and might continue to do so in the foreseeable future.

The terrorists responsible for the attacks in Madrid have struck against the fundamental principles of all European states and on which the Union is built: respect for human dignity, liberty, democracy, equality, the rule of law and respect for human rights

Of course, this issue will be one of the key issues that the EU Member States will discuss at the European Summit in Brussels in a few days.

But on a more positive note, in Europe, we are also just about to embark on a new phase in our history, namely the biggest ever enlargement of the European Union.

On the first of May, ten new Member States will increase the Union's population by a further 75 million citizens. They represent a diversity of cultures and histories, of experiences and skills.

Enlargement will indeed produce major economic, political and social impacts for Europe.

The forthcoming enlargement has already brought remarkable opportunities for enterprises in both the current and future Member States. And for our trading partners such as India, enlargement will at the same time see both the emergence of a new, perhaps more dynamic partner or competitor and new opportunities for trade.

This week's European Summit will also be an opportunity for our Heads of State and Governments to focus on the economic perspectives and European strategy to ensure that our region remains dynamic and competitive in the global economy. It is important that this issue be maintained on top of our agenda.

At the heart of these discussions are the concerns in Europe about productivity and innovation. Europe needs to increase productivity growth to remain competitive. We also need to step up and get more results from innovation and entrepreneurship. In the light of India's excellence in these fields, I am, as always, looking forward to listening to India's experiences during my visit here.

These elements are essential in realising our general economic growth objectives and to allow your companies to remain competitive in markets all over the world notably a market as competitive as India's.

So what are we doing in Europe to achieve these objectives?

First, we need to get our regulatory framework right, through better and more transparent procedures such as posting all planned regulation in advance on the internet for everyone to see and submit comments. Industry and other stakeholders need to be involved in the legislative process to ensure that the regulators get it right and produce cost efficient legislation that does not hamper innovation and competitiveness. A good example of this has been our recent policy decisions on a new chemical legislation in Europe.

Second, it is crucial that we put the manufacturing industry back on the radar-screen of European and national policy makers. In this era of globalisation, the vibrant issue of de-industrialisation or outsourcing is closely linked to the debate on competitiveness, productivity and innovation. Our role is to ensure that Europe's industry can thrive in an attractive regulatory environment that takes account of its needs to develop, to be creative and innovative.

Third, to achieve this, Europe needs to boost research and development and the use of information and communication technologies.

Economists have been studying the relationship between the use of information and communications technologies (ICT) and productivity, at macro-level, as well as at the firm or sector level. Both at macro and micro-level, clear relationships between ICT and economic performance are found. At the firm-level the finding is that long-term sustained use of ICT in companies is likely to lead to higher profits and increased market share, but only if it is combined with organisational change and upgrading the skills of employees.

In Europe, our eEurope Action Plan has been the blue print to boost use of ICTs through measures ranging from more competitive telecom networks to improving services and reducing prices to stimulate demand via, for example, eGovernment and enhancing trust and security.

With the achievements of the eEurope Action Plan and the upswing of the economies, the signs are improving in Europe. One of the main trends of 2004 is that broadband is on the rise, growing by 90% per year.

Broadband enables many innovative applications, such as collaborative design, online health, entertainment, etc. Advanced applications and services in their turn create demand for better infrastructure. Europe's strength is our technology-neutral regulatory framework for electronic communications that encourages facilities-based competition. Where there are competing broadband platforms the market is growing fastest.

Another main opportunity for Europe to increase productivity and innovation is in advanced mobile services. This is another trend: mobile data services and 3G will become a reality in 2004-2005 and will break into the mass market.

While ICT infrastructure and services are improving we need to continue reinforcing trust and confidence, by better hard and soft security. And winning the war against spam by legal measures and ultimately, by making it too expensive for the senders

Finally, Europe has to significantly increase spending in R&D, to 3% of GDP. A large part of that should come from the private sector.

The Euro India Co-operation Forum on the Information Society is a building block in this regard. Through international cooperation notably with India, which has such a proud tradition in IT research, Europe and India can achieve a genuine win-win situation.

The Forum is a milestone in the process of technological and industrial co-operation between the European Union and India. Over 300 Europeans have come to see how their organisations can develop either business or research co-operation. This is a unique sign of the potential of co-operation between our countries. I would like to encourage you to take advantage of the Forum to consolidate or start links between Indian and European delegates and to consider the IST Programme as the possible platform for future research co-operation.

One of the key elements here is to ensure the free movement of researchers between our regions. Just very recently, we have proposed radical simplification of admission conditions for researchers to remove red-tape and facilitate free movement. This should be a step in the right direction.

Indeed, innovation is also a promising field of cooperation between EU and India. In order to encourage this bilateral cooperation, an agreement was signed in 2001 for common research. And in 2003, India integrated the development phase of the Galileo project.

This leads me to make a few words on current EU India relations.

There has been quite a bit of activity in this field over the last few months. My two colleagues Pascal Lamy and Chris Patten recently visited India.

As European business representatives here in India, a key element is of course trade and investment, and here the multilateral track under the WTO is crucial. Although there are some irritants before us like wine and spirits, anti-dumping, market access for textiles and intellectual property rights issues, our overall relations are thriving and moving steadily forward.

Pascal Lamy is busy preparing for the re-launch of the WTO talks. This is a real priority for the European Commission. Obviously EU India relations are important to pave the way in this regard.

The EU-India Summit in November last year was successful, with a new priority given to the political leadership as well several important deliverables, like as I have already mentioned - India's participation in Galileo, cooperation in customs affairs, start of negotiations on a new maritime agreement and a new and ambitious trade and investment development programme. Chris Patten was just here in January with the EU Troika to bring discussions forward to prepare for our next Summit which is foreseen for the end of this year in the Netherlands. Europe also welcomes the process initiated by India with the South Asian Association for Regional Cooperation (SAARC) countries, where the decision to create a Free Trade Area represents an important step in regional integration. It represents a huge potential for wider markets, investments attraction and better integration of industrial activities very much like the ones in Europe following enlargement after the first of May.

We are closely following India's attempt at developing institutions in order to be able to implement common policies and a framework for business. The EU is committed to supporting this process through technical assistance and sharing its own experience. The Commission has recently proposed a special fund for SAARC in the 2005-2006 Regional Indicative Programme for Asia.

In addition, regulatory dialogues have started recently between India and the EU on Maritime and Customs cooperation. This is in the right direction to ensure regulatory convergence between our regions. We are convinced that more can be done in other fields. The European Commission will, this summer, redefine its policy vis-à-vis India through a communication and the potential of a regulatory dialogue.

But of course business is very important and visible in our endeavour towards facilitating trade and investments between our two regions. I was particularly pleased to attend the EU-India Business Summit in Copenhagen where we set bold targets for the development of EU-India trade. These Summits are a good opportunity to take stock of both political and practical issues of concern to the business community. But strong commitment by the business community is needed if the political significance and momentum of these Summits are to be maintained. The Summits could be a light-house of the mutual importance of India and the EU as respectively an important investment destination and a huge market. The recommendations of these Summits are important to promote trade and investment and to start the bridge-building on multilateral trade. It is crucial that the business voice is heard loud and clear when carving out the policy priorities for EU India relations of the future.

Competitiveness and trade are key elements of economic growth that need to be continuously addressed. In this process the business and the business organisations support that you represent here, play a unique role. It is important for Governments to get a practical input on trade, competitiveness or regulatory matters involving both our regions and to get that input directly from the very actors having a practical perspective.

The European Union and Indian administrations have mutual interests and synergies. To develop their co-operation will be an important element in an increasing global economy.

It is now important that we work on implementing the recommendations and ensure proper follow-up.

I am looking forward to my visit here in New Delhi. As you know, the main reason for my visit is the EU India Cooperation Forum on Information Society which has attracted quite a lot of interest. But I will also meet with Mr Shri Arun Shourie, Minister of Communications and Information Technology and launch a dialogue on Information Society issues.

Although I must confess that my knowledge about cricket is scarce, my stay here will be what you might refer to as "a short innings" but I trust it will be a good one and that it will be a continuation of the marathon of EU India relations. Marathon running is a sport I know better and here, what is important is the fact that you keep moving to reach the finishing, rather than the speed by which you move. And that is certainly what our relations have been doing for some time now and will surely continue to do so in the future.

Now I would be pleased to take your questions. Thank you.