The Hindu Business Line : Luxembourg keen to do business with India

Luxembourg. A country whose name a good many Indians may be familiar with. For, it was last year that Mr Lakshmi Mittal's Mittal Steel made a hostile bid and succeeded in acquiring the Luxembourg-headquartered Arcelor Steel.

But that is not the only reason the Luxembourg Government would like Indians, especially those interested in doing business in Europe, to remember it for. The Government of this small country — a Grand-Duchy bounded by neighbours like France, Germany and Belgium etc. — is keen to project Luxembourg as the biggest financial centre in Europe and the second biggest after the US.

The figures reeled out by the administration and those associated with Luxembourg's financial sector are indeed impressive: It has 154 banks, of which 150 are foreign majority owned with total assets of 828 billion (about Rs 49,68,000 crore); 2,170 investment funds with assets under management of 1,733 billion (about Rs 10,398,000 crore) of which 2-3 per cent is invested in India.

Once you are in Luxembourg, you are in the Europe Union, which today consists of 27 countries. And 15 of these — the Schengen States as they are called — can be visited with a single visa.

As part of the process of wooing Indian investment in Luxembourg and promoting greater economic ties between the two countries, three senior Luxembourg ministers are due to visit India. The first will be the Treasury and Justice Minister, Mr Luc Frieden, who will be in India in the third week of January, followed by the Deputy Prime Minister and Foreign Affairs Minister, Mr Jean Asselborn, in mid-February. Then will come the Economy and Foreign Trade Minister, Mr Jeannot Krecke, in April.

During interactions with some Indian journalists, on a visit to Luxembourg organised by the Treasury Ministry, the ministers — Mr Frieden, Mr Krecke and Mr Asselborn — as well as bankers and fund management representatives and Mr Lakshmi Mittal, President and CEO, Arcelor Mittal, highlighted the ease of doing business in Luxembourg.

Biz-friendly Govt

Mr Mittal, whose company Arcelor Mittal is due to shift its headquarters to Luxembourg during the second quarter of 2007, told the Indian journalists that "Luxembourg is an attractive place for business. The Government is very co-operative. They like to promote businesses. We have studied Luxembourg from the tax point of view and we have been advised that this is a very good place."

Mr Frieden, who points out that he drafted a takeover law for the country in the midst of Mittal Steel's bid for Arcelor, says that Luxembourg tries to create laws in a business-friendly manner, after extensive discussions with the private sector, to ensure that the laws aid economic development. Luxembourg, according to Mr Frieden, occupies the second slot in the world in cross-border funds and is a leader in Europe as far as banking is concerned. He is keen that the laws ensure that the country occupies the top slot. On his proposed visit to India, Mr Frieden says Luxembourg is a truly international place with all the leading financial companies of the world present there barring those from India. He feels that this could be because not enough effort has gone into explaining to Indian companies the benefits of being in Luxembourg.

Double-taxation issue

Both Mr Frieden and Mr Krecke also hope that all the issues relating to a double-taxation avoidance agreement between Luxembourg and India would be ironed out shortly for a formal signing of the deal.

Mr Krecke says he has twice been to India. The first time in 2005 and again in February 2006. During his first visit, he recalls, the press was not interested in Luxembourg related issues and during the second time "I could not get the press away from me." "I was wondering what had changed," he adds, alluding to Mittal Steel's takeover of Arcelor.

China and India, according to Mr Krecke, are two countries that will offer a lot of opportunities for Luxembourg.

Adds Mr Mittal, Luxembourg is an attractive place for Indian banks to have their private banking. He even suggests that a twinning discussion could take place between Luxembourg and Mumbai, as financial centres. Mr Krecke is aware the manufacturing sector's contribution to Luxembourg's GDP is falling, something that he is keen to correct. For this, he would like to position the country as a logistics hub and as a place for the plastic industry to manufacture from. For India in particular, he would like to highlight that Luxembourg has a strong auto component industry.

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