India strategy must combat NZ business apathy

Friday 21st October 2011 1 Comment

New Zealand’s fledgling trade relationship with India is the first target of a series of “NZ Inc” strategies to grow exports quickly, especially through free trade deals.

Prime Minister John Key launched the government’s ‘Opening Doors to India’ strategy in Auckland yesterday, in a bid to replicate the explosive growth in exports to China since a free trade agreement was signed three years ago.

Despite India being the world’s second-most populated country, and experiencing economic growth rates second only to China’s, it spends only 15% of what China does on New Zealand goods, a mere $929m for the year to August 31.

New Zealand’s two-way trade with India, at $1.3 billion in the year to August, is only a tenth of the two-way trade with China over the same period, at $12.9 billion.

Key took a high-powered trade mission on a state visit to India in June to promote an FTA with India, saying the government had “set a target of growing two-way trade from $1.28 billion to $3 billion by 2014.”

“We need to make the most of the opportunities India provides,” Key said in a statement yesterday, with aim of India and New Zealand becoming core economic and political partners by 2015, a wider diplomatic and security aim of a deeper relationship with the fellow Commonwealth country and parliamentary democracy.

Following the signing of an FTA with China in 2008, NZ exports to the fastest growing major economy in the world have grown fast. According to Statistics NZ data, the value of New Zealand exports to China was $5.8 billion for the 12 months ended August 31 this year, a 160% increase on the $2.2 billion value for the same period in 2007/8.

An FTA negotiation is considered the most important step towards achieving the strategy’s five key goals, which focus on growing trade, improving the bilateral investment framework, attracting and retaining skilled migrants, and engaging more with India on relevant regional and global issues.

Earlier this year, Key fended off suggestions that the FTA would cause job losses, telling 3 News in June that these were “exactly the same concerns which were voiced when we signed CER nearly 30 years ago with Australia. They’re the same concerns which were voiced in 2008 when we signed the FTA with China. You look at it and you say, ‘Has that actually been the result?’ and the answer is ‘no’.”

The ‘Opening Doors to India’ strategy was developed by the Ministry of Foreign Affairs and Trade as part of its ‘NZ Inc.’ programme to coordinate New Zealand’s approach to international engagement, especially with so-called BRIC economies – emerging major world economies including Brazil, Russia and South Africa.

However, an NZ Trade and Enterprise survey in 2009 showed local business owners to be unaware of or disinterested in the possibilities for an improved bilateral economic and trade relationship with India, while Indians found New Zealanders relatively unmotivated and naïve in business matters.

NZTE have been heavily involved in the development of the strategy and have prepared a guide for ‘doing business in India’ which walks the novice exporter through what to expect when attempting to branch out into the Indian market.

BusinessDesk.co.nz

Comments from our readers

On 21 October 2011 at 11:32 pm Dr BRS Hegde said:

Good well thought article