Developing Denmark Lessons to be Learned from India Danish Growth Challenges

Transcription

1 Developing Denmark The Confederation of Danish Industry (DI) conducts a campaign entitled Developing Denmark to promote growth in Denmark. The aim of the campaign is through public events to enhance the understanding within the Danish society for taking policy initiatives that strengthen economic growth. At the same time the campaign seeks to identify ideas that will spur economic growth. The campaign is DI s contribution to the government s Growth Forum and, therefore, results from the campaign are reported to government. The campaign is touring within Denmark during On the occasion of the official visit to India by Minister for Economic and Business Affairs H.E. Brian Mikkelsen, a meeting was held on 7 January 2011 in New Delhi with leaders of DI s member companies with operation in India. Lessons to be Learned from India Thomas Bustrup (DI) welcomed all participants. He highlighted that Denmark s rank as one of the richest countries in the world is expected to deteriorate in years to come as other faster growing economies catch up and even surpass Denmark. He then laid out the purpose of the meeting which was to pass on experience from Danish companies operating in India to the minister and to seek answers to the two questions: 1. What can Denmark learn from a high-growth economy such as India? 2. How can Denmark link up closer to India and thereby benefit from India s high growth? Danish Growth Challenges Minister Brian Mikkelsen presented the Danish growth challenge to the participants. Denmark s economic growth has been relatively low for a range of years and is expected to stay low in the years to come. Further, the ageing of the population increases the pressure on the public finances and may also hinder growth. These are serious challenges for Danish

2 society because we are accustomed to increasing living standards from year to year and from generation to generation. Commercial Ties Benefit India and Denmark Ambassador Freddy Svane in his introductory remarks highlighted the work that is currently being done to strengthen the commercial ties between Denmark and India to the benefit of Danish companies and Danish society at large. Part of the work is to create awareness of India and the opportunities it holds within Danish business circles. It is also vital to safeguard contacts and agreements between our two governments so that commercial exchanges can take place and expand without impediments. The minister s visit and conclusion of bilateral agreements are important steps in this process. Further, he argued the need for companies to develop the right products for the Indian market. Such effort may entail reverse innovation meaning redeveloping your products and services at a lower cost level so as to suit the lower average purchasing power in India. Growth in India and Denmark Bjarne Moltke Hansen (FLSmidth) accounted for FLS activities in India which were initiated more than 100 years ago. In 2005 FLS decided to place their global engineering centre in Chennai. Since then they have pursued an aggressive growth strategy with India in the centre. Today, FLSmidth has 3,600 employees at their engineering centre and the plan is to continue the expansion. Along with the impressive growth in India, it has been possible for FLS also to expand employment at the company headquarters in Denmark. Bjarne Moltke Hansen argued that for Denmark to measure up to other countries in the global competition, it needs to provide lower taxation and a higher standard of education than at present. For Danish companies to accelerate their engagement in India he pointed to the importance of financial instruments such as the Export Credit Fund (EKF) and the Industrialisation Fund for Developing Countries (IFU). Other countries (including China) have plenty and generous financing instruments and Denmark must measure up to those to stay competitive as an exporter and investor in growth economies. Danish Companies Should Engage Globally N. K. Ranganath (Grundfos) explained the viewpoint that a rebalancing of the global economy is taking place and that the current global economic crisis has accelerated this process. The result is that the traditional industrialized countries lose momentum and weight relative to the new growth economies of which India is one of the most important. N. K. Ranganath reported that Grundfos looks to India both for market and for work force reasons and he expects that many more global companies will do the same in the coming

3 years. He argued that for Denmark s own sake, Danish companies should hurry to engage much more globally. ISS Growth Increases Living Standards of Thousands K. J. Jolly (ISS) told about the company s impressive growth rates in India. Today, the company is reported to be the world s 4 th largest private employer and with over 45,000 employees India is the 2 nd -largest country when it comes to employment in the ISS Group. ISS philosophy is to let each country manage their own growth plan. This provides the local management in each country with sufficient degrees of freedom to pursue an aggressive growth plan. Mr Jolly explained how the activities of ISS in India is helping thousands of people to upgrade their skills, obtain formal employment and increase the living standards for themselves and their families. India Has Overcome International Crisis Ms. Bidisha Ganguly from the Confederation of Indian Industry accounted for the current situation in the Indian economy. With growth rates expected to continue at around 9 per cent per annum in the coming years, the Indian economy has overcome the international financial crisis. Direct foreign investments have recovered and reaching 37 bn $ this fiscal year are exceeding the pre crisis level. Ms. Ganguly pointed to the rapid economic growth, the large and young workforce and low levels of wages compared to other developing markets as important elements in the competitiveness of the Indian economy. A large and rapidly growing middle class sustains a growing domestic market for consumer goods like mobile phones and automobiles. And exports have been growing at a rate of 16 percent per annum stepping up Indian integration in the global economy. Open Debate on Growth During the open debate, the companies present provided their views on the growth agenda, each from their perspective. S. Venkatanyarayanan of Danisco argued that it is important for Danish companies wishing to engage in India to adopt a flexible approach to this market which is highly dynamic and very different from the Danish. He stated that companies should concentrate on providing solutions to the Indian market rather than relying on their traditional products. Enhance Mutual Knowledge Vikas Kuthiala (Falck) focused in his intervention on the fact that Denmark is still not very well-known in India and that it is necessary to enhance the mutual knowledge to develop further business between Denmark and India. As one important element, he pointed to the necessity of enhancing the tourism between the two counties both ways. Also, he pointed to the need for improved exchange programmes for students between India and Denmark because such exchange experiences often develop into life-long relations and affinity at a personal level between the countries. He also commended the recent official

4 visits from Denmark to India and expressed his hope for more of the same and also that representatives of the Indian government would soon visit Denmark with a business promotion agenda. Need for Closer Networks Mandeep Singh Rathour (Kromann Reumert) argued that since India is a networking society, it is very difficult for foreign firms to become part of some of the closed Indian networks, there is a true need for establishing a closer network among Danish companies operating in India. He further argued that it would be helpful in attracting more attention in Danish business circles towards India if the institutional investors such as the major pension funds would engage deeper in India. Often such investors show the way for broader business circles in a country. Marie Ahlmann-Olsen also pointed to the virtues of further networking between Danish companies in India. She further argued that other European countries are more visible today in India than Denmark something that she argued could be remedied through more campaigning for Denmark in India s cities. Assistance to SME s Michael Carstensen (DSV) argued that networking is important for companies starting up in a new country such as India. He is a member of the local Swedish Chamber of Commerce as this provides useful networking opportunities. He further argued that the Danish government provides some sort of consolidated solution to assist Danish SME s in entering the Indian market. It seemed to him that while most of the large Danish companies are already in India, many SME s should be encouraged to follow. More Danish Companies to Engage in India for the Sake og India and Denmark At this point, the Minister stated that he had appreciated the interventions and comments given during the meeting. He repeated some of the points mentioned, for instance the fact that more Danish companies ought to engage in India for their own and for Denmark s sake. To this end, he mentioned the idea of ensuring that the Danish international financing instruments such as EKF and IFU were constantly being developed to ensure that they work perfectly to suit the needs of an important market such as India. Related to the growth debate in Denmark, the Minister stated that opposed to many others, he is not worried about the future of Denmark. However, he is sometimes worried about the level of expectations among Danes of living in the comfort, low risk and high material standard of Denmark. International exposure and benchmarking will be increasingly important in the future to ensure that the Danes expectations are realistic and that Denmark in fact lives up to international best practice in economic terms.

5 Valuable Insights Thomas Bustrup summed up the discussion by pointing back to the initial questions on what Denmark can learn from India and how Denmark may link up closer to India. He stated that the interventions given and the subsequent debate had provided a number of valuable insights. He then thanked all participants for joining the meeting investing time, effort and for some also participants also a good deal of travelling into the process. He thanked the persons that had delivered the formal interventions as well as the ones taking part in the discussion. He gave a special thanks to CII with whom DI has a long-standing and excellent relationship. He thanked the ambassador and the embassy staff for their efforts and assistance in organizing the meeting. Lastly, he once again thanked the Minister for taking time and giving priority to attend this meeting with this important group of leaders of Danish companies in India. He expressed the hope that the views from the meeting would be carried forward by the minister in relevant government circles particularly in the Danish Growth Forum. DI/January 2011