India Inc. Comes Together to Celebrate 20 years of NAFTA at MICE North America Show
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Tuesday, 15 July, 2014, 16 : 00 PM [IST]
Source: https://www.travelbizmonitor.com/Spotlight/india-inc-comes-together-to-celebrate-20-years-of-nafta-at-mice-north-america-show-246052014 marks 20 years since the North America Free Trade Agreement (NAFTA) came into force. As part of the MICE North America Show (conceptualised by Visit-USA Committee (VUSACOM) India Chapter & organised by TravelBiz Monitor) held on June 20 in Mumbai, the US-India Investors' Forum (USIIF), VUSACOM & the US Commercial Service held a discussion with India's corporate sector on doing business with NAFTA countries—USA, Canada & Mexico. TravelBiz Monitor presents a summary
The first-of-its kind B2B MICE North America Show, which highlighted the prowess of USA, Canada and Mexico as MICE destinations through day-long focused meetings between decision-makers from corporate sector and embassy officials, hotels, airlines, major tour operators, attractions, etc. culminated with a gala function to celebrate 20 years of NAFTA. Supported by the US Commercial Service, Canada Trade Commission and Mexican Trade Commission, the event, which witnessed a large gathering of high-profile members from the corporate world, comprised a panel discussion and networking over cocktails sponsored by Brand USA.
The function kickstarted with a vote of thanks by Camille Richardson, Principal Commercial Officer, US and Foreign Commercial Service, Mumbai, India, to the US High Commission and Manoj Gursahani, President, VUSACOM India Chapter, who she said was “wearing two hats tonight”, that of Vice Chairman of USIIF and President of VUSACOM India Chapter. She also extended thanks to JW Marriott Mumbai for hosting the event. Sharing a bit about the history of the landmark agreement, Richardson said that diplomatic negotiations for NAFTA had begun in 1986, and the agreement was finally signed on December 17, 1992 by then US President, George H W Bush; then Canadian Prime Minister, Brian Mulroney; and then Mexican President, Carlos Salinas, in San Antonio, Texas. The Agreement took effect on January 1, 1994.
“The purpose of NAFTA”, stated Richardson, “was to create a new economic order by eliminating barriers to trade and investment, and by facilitating cross-border movement of goods and services among the three participating countries. As of 2008, duties and quantitative restrictions were totally lifted”, she said. This trade bloc has the largest GDP in the world with respect to combined purchasing power parity, she stated.
The panellists for the evening were Dr Bharat Singh, Chairman, SBRC (Services Business Review Council), Aditya Birla Group and Chairman, USIIF; Harish Laxman, Managing Director, Rane TRW Steering Systems and Chairman, Automotive Components Manufacturers Association of India (ACMA); and Ameet Nivsarkar, Vice President, Tata Consultancy Services. The discussion was moderated by Sasi Kumar, Executive Director, Ernst & Young India.
Citing the example of Aditya Birla’s company, Hindalco Industries Ltd., Dr Singh said, “Hindalco honed in on ‘Novelis’ and acquired 100 per cent for a whopping USD 6.25 billion. Within two years, its revenue went up to USD eight or nine billion, and today it is USD 12 billion. At a time when very few companies were putting money back into business, we were almost breaking path.”
As to why Hindalco chose the NAFTA region, Dr Singh said, “NAFTA is the world’s biggest and richest market, it is eco-friendly, it is as diverse as India and has English-speaking people.”
Laxman gave statistics about automotive trade between NAFTA and India. “The Indian auto-component industry is a USD 40-billion one, out of which export is USD 9.7 billion. Out of the USD 9.7 billion, 23 per cent is to the NAFTA region, which has the largest share. Exports to NAFTA is USD 2.2 billion, and imports from NAFTA is USD 831 billion”, he stated.
“Clearly we have just started dating, but, although we have a long way to go, NAFTA is one of the most exciting export markets, especially from an SME viewpoint. In the last five years or so, the CAGR has been upwards of 30 per cent. Economic pressure is making people in the NAFTA region look for low-cost solutions, and India is able to capitalise on that,” Laxman pointed out.
Speaking about the IT sector and how NAFTA has been opening up opportunities, Nivsarkar said, “NAFTA offers larger markets and economies of scale, and therefore, because of lower costs, opportunities for plough-back into R&D.” He went on to say, “Although trade agreements are mainly written from a goods point of view, they help the services sector too. After the opening up of the Indian economy in the 1990s, countries were able to embrace the Indian services sector easily. In fact, it was this that led to the explosion in the IT sector. Today, 60 per cent of TCS’s revenues come from North America. This is itself an indicator of the ease of doing business there.”
On how he perceives India’s competitiveness in the NAFTA region, in the manufacturing sector and services, Dr Singh said that in the end of 2010, the US started bringing jobs that were outsourced back to the country. In the manufacturing sector, the availability of opportunities in the US and Canada is huge, he said.
“As far as green field investment is concerned, Mexico offers excellent opportunities. Labour is very efficient, with very little supervision required, and great adherence to training. In Mexico, if a business is down for six months, it will be up for sale,” Dr Singh said.
R&D & Technology for Growth
Kumar then steered the discussion to experiences with R&D and knowledge-collaboration between NAFTA and India. Laxman said that there was “fantastic” technology in North America, and that the region has been able to bifurcate between high-end value-add, medium and lower-end. “There is a lot of technology exchange between India and NAFTA. Today a lot of patents are getting created in India for the region, as well,” he stated.
Nivsarkar opined that there has been a growth wave in the US, Canada and Mexico, and with the new government in India, opportunities should continue to grow well here too. However, “communication could be better”, he opined. Kumar corroborated that it is indeed important to offer clear information on the progress made between India and NAFTA. “There is a lot of hope and opportunities for NAFTA and India to work together in areas of investments and trade partnerships involving knowledge, research and development”, he said.
Richardson, Rodrigo Blanco, Trade and Investment, India, Sri Lanka, Maldives Bangladesh & Nepal, Mexican Trade Commission Office and Nicolas Lepage, Consul and Senior Trade Commissioner at Consulate General of Canada in Mumbai addressed the gathering individually to conclude the formal part of the evening. Richardson thanked the panellists for highlighting business opportunities in the NAFTA region, and talked about the ‘Select USA’ programme. Select USA will be holding its Summit in March 2015, she informed.
Blanco pointed out that Mexico has a lot of business opportunities to offer. “We have a lot of collaborations with the US and Canada,” he said. Lepage noted that North America was a very large market and that there was sizably combined GDP growth. “US, Canada and Mexico have recovered from the last crisis. It makes sense for companies to look at North America. Goods and services are flowing between our countries,” he stated.
Kadambini Mittal, Regional Director, Global Sales, India & Subcontinent, Marriott Hotels India Pvt. Ltd. said that hotels have seen huge growth due to the MICE segment, and that the growth rate for the USA is 26 per cent. Sheema Vohra, President, Sartha Marketing, which represents Brand USA in India showed a short video highlighting USA as a destination and reiterated how MICE is an important segment for USA. She said that she is very positive about growth in tourist numbers and MICE traffic from India to USA. Gursahani gave the final vote of thanks to conclude the event.