The Hindu Business Line : Re-defining Indo-Dutch economic ties

The Netherlands may have been slow to wake up to India's economic resurgence, but it is making up by quickly "redefining" the trade and investment relations.

Like most other staid and conservative Western economic powers, the Netherlands too has taken its time to wake up toIndia's economic resurgence, with the result that the Dutch are now in the middle of a process essentially to "redefine" their trade and investment relations with India.

It should be said at the very outset that the task promises to be difficult not only because of the effort needed to overcome the existing "mental hurdles" deeply ingrained in the average Dutch business psyche with regard to doing business with India but also because of the tough competition, which the official Dutch initiative is likely to face from competitors which have been faster off the mark.

Even so, there should be unanimity on the view that the process needs to be encouraged, not merely from the Dutch perspective — which is legitimately concerned with the need to exploit a potentially rich trade and the investment opportunity offered by the "emerging economy" status of India — but also from the Indian angle, especially as business cooperation with Dutch entrepreneurs is still cast in a decades-old mould.

Beginning of new initiative

Indeed, the Dutch initiative can be said to have begun in right earnest in October last year when the then Dutch Deputy Prime Minister and Minister for Economic Affairs, Mr Laurens Jan Brinkhorst, visited the country with the stated intention of seeing for himself "what outsourcing was all about" and, generally, "to build relations of trust and explore the business opportunities", which India was promising to provide. He brought with him a business delegation comprising 55 companies, which was firm evidence of the intention of the Dutch to forge closer and more extensive trade and investment ties with India.

Next month, the Dutch Minister for Economic Affairs, Ms Karien Van Gennip, will visit Delhi, Bangalore and Chennai, at the head of another large business delegation, thus confirming for all practical purposes that the Dutch interest in a greater engagement with the Indian business community is here to stay. Everyone will agree that the present juncture provides a good opportunity to both the sides to tap into the mutual economic cooperation potential. But it is also evident that a great deal of preparatory work will have to be done to make the effort bear fruits.

For instance, in recent times, the Indian ICT sector has made deep inroads in the Netherlands, the proof of which is provided by, among other things, the setting up of the European head-offices of IT giants such as Wipro and TCS in the Netherlands (the latter will be formally opening its office in Amsterdam in October). But this entry of Indian IT specialists has not been without its crop of problems, especially those related to the visa issue.

Visa issues

In fact, when Mr Brinkhorst visited India, the Commerce Minister, Mr Kamal Nath, impressed on him the need to smoothen out the visa problem, the visiting Minister's response being (as reported): "We have the political will to put in place a relaxed visa regime for the knowledge workers. The bureaucratic resistance will soon disappear".

The good point about this reassurance is that the Dutch authorities have been true to their word in that steps have been taken (at the local level) to make it easier for smaller Indian ICT companies to send workers to their clients spread all over the Netherlands. Further, as this correspondent discovered after discussions with a wide cross-section of people (including resident Indians) in the Netherlands during a recent visit, the knowledge workers faced no racial discrimination as such because of their positive contribution to the Dutch economy.

Admittedly, India's earnings from ICT (software exports and BPO activity, in particular) have grown substantially in the recent past, with the outlook continuing to be promising given the expected rising demand curve in the Netherlands. But the trade exchange in the traditional sectors continues to be bound by a low-level equilibrium, which should cause some concern in view of the fact that a real take-off in bilateral economic cooperation should actually be reflected in progress in these sectors and the investment flows of both countries.

Dutch exports

Almost two-thirds of Dutch exports are accounted for by chemical products and machines, the principal Indian exports being readymade garments, cotton including accessories, petroleum products, electronic goods, transport equipment and drugs and pharmaceuticals.

The Dutch have been suffering a trade deficit but a large part of that is said to be the result of substantial Indian exports meant for third countries being registered as Dutch imports at the port of Rotterdam.

The effort to "redefine" Indo-Dutch economic relations has led the Dutch Trade Board (set up in2005) to draw up a broad action programme detailing the areas of cooperation that should receive attention, the hurdles that need to be tackled at the official level and the mechanism to be set up at the grassroots level to serve as interaction points between the actual players (that is, companies, especially small and medium enterprises).

Rise in business enquiries

Dutch officials told this correspondent that the number of enquiries from companies about business prospects in India had increased in the recent past. Quite clearly, the entire effort at "matchmaking" between Dutch and Indian corporate counterparts will produce the intended result only if people know precisely where to call or send a mail following their enquiries.

In other words, the quality of the follow-up to visits like those of Mr Brinkhorst and Ms Gennip will be the real stepping stone to a more sustainable and profitable economic relationship between the two countries, a sphere in which the chambers of commerce can play a decisive role in the different regions of a country as vast as India.

Sunrise areas

The sectors, which have been identified by the Dutch Trade Board as the "sunrise" areas for the future of Indo-Dutch economic relations are: Agro-industry, building, infrastructure and logistics (including port and airport development and the water sector), ICT, the medical sector, and biotechnology.

In these highly competitive times (with all the imperfections on the Indian side), flexibility and speed of operations is the need of the hour to make effective headway in these and other areas.

That efficiency process should begin with the first telephone call or mail by an intending investor. It will perhaps not be improper to suggest that half the battle will be won if that first connection is made successfully, which will not be an easy task.

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