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Luxembourg assumed the Chair of the European Union on 01 January 2005. In eurospeak they call this “the Presidency of the Council of the European Union”. Every ten years or so, this rotating system gives each member of the European club, small or large, the opportunity to be at the helm of its business for six months.
The European Union and India are seen as forces for global stability. Their spheres of influence are increasing. Jointly they can be much more effective in addressing the world’s challenges. The once-a-year EU-India Summits at Prime Ministerial level, which were initiated in 2000, are the main formal events in EU-India dialogue. Since then the relationship has blossomed and given birth to meetings at all levels and manifold exchanges of views on economic and political issues.
At the last Summit, hosted by the Netherlands Presidency in The Hague on 8 November 2004, it was decided to upgrade the relationship to a Strategic partnership, at par with EU’s relationships with USA, Russia and China. To implement this, an action plan with priority areas and a political declaration will be both negotiated under Luxembourg’s Presidency. The text will hopefully be adopted during the next Summit, scheduled under the UK Presidency, in the latter part of 2005.
The EU initiated this step. Its objectives are to increase cooperation through multilateralism, fighting terrorism and weapons proliferation, furthering conflict prevention and peace keeping. On the trade front, increasing economic partnership through sectoral and regulatory policy dialogues, and improving cooperation on development goals while fostering intellectual and cultural exchanges are priorities. India has swiftly responded and added some of its own ideas. Streamlining will now take place between Delhi, Brussels and Luxembourg.
First an EU-India experts’ meeting should be convened in Delhi very soon. Detailed proposals for inclusion in the action plan will be fleshed out through meetings of experts’ working groups. And EU-India Foreign Ministers, chaired on the EU side by the Luxembourg Foreign Minister, will assess progress, sometime around April. Also a senior officials’ meeting might put the finishing touches to the documents that will be formally adopted at the next summit.
A strategic partnership is not only about warm words and diplomatic promises. The European Union is India’s largest trading partner, accounting for one-fourth of its imports as well as exports. The EU is also the largest source of actual foreign direct investment into India and India’s leading partner in development cooperation. Both are part of the free world and share a common vision with regard to democracy and multiculturalism.
Ties are therefore solid but in a dynamic world environment, they must be further broadened and strengthened. The aim is to achieve an inclusive political and economic dialogue, with priority areas and efficient implementation mechanisms.
Luxembourg in Brief
The Grand Duchy is a founder member of the European Union. Until 1965 it hosted the headquarters of what was then called the European Coal and Steel Community (ECSC), founded in 1951. Luxembourg lost the offices of the ECSC, but it has since developed into the legal capital of the EU– the European Court of Justice and the EU Court of Auditors are located in Luxembourg. Also the EU Statistical Office, the European Investment Bank, parts of the European Parliament and EU Commission, have settled in Luxembourg.
Further, the world’s number one steel producer, Arcelor, and the biggest international private satellite operator– SES Global, are both headquartered in the Grand Duchy. Several multinational companies from all over the world (Good Year, TDK, Dupont, Guardian, and others) have chosen Luxembourg as their European production site.
During the seventies, Luxembourg added a new business sector – banking and insurance – which has now become the single biggest private employer. The mutual funds industry in Luxembourg has reached the number two position in Europe, and boasts of a market value of more than 1000 billion dollars. Economists know about Luxembourg’s affluence, which is due to a remarkable political and social stability, a very convenient location on the division line between French and German speaking Europe, and last but not the least, due to the foresight and pragmatism of its political and social leadership.
It might be only 2500 square kilometres in size, but the Grand Duchy was given the significant title of “the Green Heart of Europe” by its neighbours. Tourists flock to this melting pot of French savoir de vivre and Germanic efficiency, known for its medieval castles, rolling hills and romantic river valleys.
Luxembourg-India
The Government of Luxembourg opened up its embassy in New Delhi, on 27 February 2002. The current Ambassador is H.E. Mr. Paul Steinmetz. From a diplomatic viewpoint, the opening of the embassy marked the increasingly global ambitions of the Grand Duchy. The mission in Delhi is only the fourth embassy of Luxembourg in Asia, following openings in Beijing, Tokyo and Kuala Lumpur. Luxembourg also has 22 diplomatic representations abroad, mostly in Europe.
Looking at the business angle, the aim of the embassy is to expand trade between both countries and to attract investment to both jurisdictions. As a prerequisite to boosting trade and investment figures, the Luxembourg government is working towards achieving an agreement on a double tax avoidance treaty with India.
However, bilateral exchanges between India and Luxembourg are still quite modest. Exports from Luxembourg to India in 2003 were only valued at about EUR 10.4 million, while India sold goods worth around EUR 12 million to Luxembourg.
There’s been some upward movement in trade between Luxembourg and India since 1997, especially regarding India’s exports to Luxembourg, which have doubled. They still cover traditional items; however, such as textiles, base metals and leather items. These days India also exports some machinery, equipment, and a certain range of plastics and rubber to the Grand Duchy.
The major portion of Luxembourg’s exports are attributed to Paul Wurth – the engineering and high tech company that played a crucial role in the modernisation of India’s steel industry over the past 20 years. More than 15 high furnaces (bell-less tops) have been installed over the years with SAIL, TISCO, the Jindals and others.
Tradearbed–the trading arm of steel giant ARCELOR, set up an office in India initially to boost Luxembourg’s steel exports; a mainstay of the country’s economy since the end of 19th century. It soon specialised in selling steel from India to China and the US, thereby helping India’s steel industry to export and grow. ARCELOR has also started transferring technology to Indian steel producers. This demonstrates that trade and investment are a two-way street and that both are inextricably linked.
In February 2003, a cooperation agreement was signed in Delhi between Luxembourg’s Economics Minister, Mr Grethen and the then Steel Minister for India, M Tripathy, to increase these exchanges in the steel sector, resulting in benefits for both Paul Wurth and Tradearbed, and their Indian counterparts.
Chennai is the India hub for Luxembourg’s all-cargo airline Cargolux. There have been three flights a week since 2004. Many Indian freight forwarders, mainly from the south, work with the Luxembourg airline to route their European exports efficiently and rapidly. A new aviation agreement formalising this link between India and Luxembourg, entered into force at the beginning of 2004.
One Luxembourg company is proud to have a manufacturing unit in India. Following its merger with an Austrian company, Ceratizit (formerly Cerametal) has become the owner of a manufacturing unit in Kolkata and manufactures elements for machine tools. Also, the world’s number one private satellite operator headquartered in Luxembourg, SES Global, has a presence in India through those television channels (notably Star TV) which make use of the Asiasat satellite – part of the SES Global bouquet of 28 world spanning satellites.
Many of India’s big corporates have listed their shares (GDRs) on Luxembourg’s efficient and competitive stock exchange. There are now about 56 of them, with a capitalisation of around US$2 billion.
Other companies from Luxembourg manage their business with India out of regional sub-offices (such as Singapore in case of Dometic, formerly Electrolux) or with the help of local partners (Secalt, Villeroy & Boch). Half a dozen or so other Luxembourg companies are direct exporters (Amer Sil, ELTH, Rotarex, NFM Trading, Commerzbank), and are exploring the Indian markets.
Looking at the above mentioned trade figures and the increasing but still rather limited presence of Luxembourg companies, the focus of the embassy is on increasing bilateral trade. Special emphasis is being given to the automotive sector. Due to the proximity of 22 major automobile manufacturing units within a radius of 300 km, Luxembourg has become a regional centre of sorts for automobile components. More than a dozen companies are now present in this field (temperature gauges, plastic tanks for wipers, frames for batteries, separators for batteries, truck tyres, windscreens, passenger seat sensors, valves, car refrigerators, fuel tank ventilation, isolation material, springs for shock absorbers, research and aerodynamics testing, homologation, special vehicles, hydraulics, etc). With India developing fast, its own components sector synergies might be explored further. As the Indian economy liberalises, the Embassy will also look at new business sectors in the services industry (film industry, banking and insurance).
India with its competitive advantage, stable government and steady growth, provides a favourable climate for business. The embassy will therefore help Luxembourg’s companies investigate the opportunities provided by India as they increasingly look east, in order to diversify export markets.
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