Sat, Feb 25, 2006 - Page 10 News List

Think tank touts India investment

By Jessie Ho  /  STAFF REPORTER

With a booming economy in a wide range of industries, India -- now the world's 10th largest economy -- could represent a bonanza for Taiwanese businesses, according to a report released yesterday by the Taiwan Institute of Economic Research (TIER, 台經院), a think tank with close ties to the government.

As one of the "BRIC" (Brazil, Russia, India and China) nations, "many in Taiwan still deem India a brick that is merely gilded by gold, but it will turn into a pure gold brick in the near future," Wu Fu-cheng (吳福成), deputy director of TIER's division of international affairs, told a press conference.

India's edge in information technology, software, biotechnology and the service industry has attracted many multinational companies, including Microsoft Corp and Intel Corp, Wu said.

Its English-speaking environment, quality staff and low costs also make India a hub of business process outsourcing (BPO), knowledge process outsourcing (KPO), and back-office services, he added.

So far, Taiwanese companies only have a toehold in the market, with just a few firms such as Hon Hai Precision Industries Co (鴻海精密), Sanyang Industry Co (三陽工業) and MiTAC International Corp (神達電腦) investing in the nation.

In addition to exploiting India's domestic market, which has a growing middle class with increasing purchasing power, Taiwanese businesses can also sell their products to neighboring countries through regional economic integration, Wu said.

The India-led South Asia Free Trade Agreement (SAFTA) took effect on Jan. 10, allowing goods made in India to flow to member countries with zero or low tariffs, Wu said.

SAFTA members include Myanmar, Thailand, Sri Lanka, Nepal and Bhutan, with a total trade volume of about US$60 billion per year.

India is also in negotiations with Japan and the ASEAN in inking FTAs, making the nation a potential base to enter those markets, he added.

However, a comparatively weak manufacturing industry, poor infrastructure, power shortages and a bureaucratic culture are challenges that companies need to be prepared for, Wu warned.

As a result of Taiwan's overly concentrated investment in China, the government is encouraging Taiwanese businesspeople to direct some of their investments to India. This month it set up the Taiwan-India Cooperation Council toward that end. The Bureau of Foreign Trade also plans to visit India in June to look for business opportunities for local companies.

"Although China is the world's factory, India is now the world office and is set to create more output value than its bigger rival as predicted by the world's market-watchers," Wu said. "If Taiwanese companies are still reluctant to act now, it will be too late."

Even so, China is still the first pick for Taiwanese businesspeople in terms of geographic location and similarity in language and culture, said Hector Yeh (葉惠德), president of the Association of Shanghai Taiwan Businessmen Invested Enterprises (上海台商協會).

While its rival Foxconn International Holdings Ltd (富士康控股) has announced that it will set up a handset-assembly factory in India, Rock Hsu (許勝雄), chairman of the Kinpo Group (金仁寶集團) said he has no intention of following in its footsteps due to India's poor hygienic conditions and

infrastructure.

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