Mr. Carlos Abijaodi, Director of Industrial Development, CNI
Mr. Brian Molefe, Group Chief Executive, Transnet SOC Limited
Mr Veni Shone, CEO (Brazil), Huawei Technologies Limited
Mr. Rustem Khamitov, President of the Republic of Bashkortostan
Chairmen and Members of the BRICS Business Council
Senior Industry Representatives from across BRICS countries
Senior Government Officials
Members of Media
Ladies and gentlemen
A very good afternoon to all of you,
I am indeed honored, as I stand before you, representing the Indian business community and for being given this platform to share my thoughts and perspectives on a significant topic for us- the BRICS nations.
The theme for this session is ‘Economic Integration – Challenges for Sustainable Growth.
I believe this is a very pertinent topic especially for the BRICS nations primarily for two reasons.
First and foremost, the region needs to reestablish it’s prominence as a primary driver of the global economy.
A decade ago the BRICS countries were applauded for their high growth rates and their contribution to the global economy.
Although, the BRICS markets have weathered the global economic crisis reasonably well, the fortune of these economies has also taken a nosedive, eroding the achievements we have made over the years.
The BRICS now need concerted efforts to recapture her leadership position in the post crisis global economy.
The second reason being, given that the world economy is currently in a state of uncertain growth, BRICS have to look towards regional and domestic drivers for regaining and sustaining the growth momentum.
Therefore the need of the hour for the BRICS nations and its political leadership is to foster larger regional integration and adopt sustainable growth agenda which will be rewarding to us in the future.
Today ‘sustainable growth’ is at the forefront on the agenda of most governments and also corporates where businesses are keen to positively contribute to society and the environment.
I am thankful to the summit organizers for giving me this topic and I would like to unfold this topic in five parts.
To start with, I would like to reflect on the growth experience of the BRICS economies during the crisis period and their potential for playing a pivotal role globally in the post recovery scenario.
The global economy is finally showing signs of recovery, but requires immediate attention.
The return of confidence in the financial markets and businesses globally helps very well for the resurgence of the BRICS nations.
BRICS countries together make up 43% of the world population and hold a combined GDP of 26 trillion dollar in purchasing power parity terms making it a formidable economic alliance.
They have collectively contributed 36% of the global growth in 2013 and are still among some of the healthiest of the world’s largest economies.
The BRICS possess immense natural resources, well-organized industrial base and professional human resources.
While each nation in the region followed their own growth trajectory, all have very favorable demographics for next 20 years and enormous growth prospects.
Sixteen years from now, half the global stock of capital, totaling 158 trillion dollars
BRICS has the potential to overtake G7 in the next ten years. I am very clear about our future growth & prosperity of the region.
After having addressed our potential, we need to also reflect on the experiences of the BRICS economy during the crisis period and the lessons learnt by us for shaping the future.
The prolonged growth deceleration, the reversal of capital flows that led to equity market losses and currency depreciation and loss of business confidence have really exposed the vulnerability of the BRICS economy to sustain and grow as a region.
The policy challenge for the BRICS region is how to sustain a rapid and economic growth driven by both external and domestic markets in a sustainable and more balanced way.
Hence, decisions arising from this summit will have far reaching impact on the future of the BRICS region and will reinstate the fabric we stand for.
I wish to now focus on Point II, i.e. the Indian perspective and the influence it can have in shaping the sustainable development agenda of the BRICS.
After witnessing a great economic growth of close to 9% during 2003-2008, the Indian economy too experienced growth deceleration due to both global and domestic factors.
Declined growth during the last two years was broad based, affecting the industry sector badly. Inflation too consistently has been above the comfort zone providing no room for easy liquidity.
Fortunately, there is now revival of economy being seen in the past few months. The Indian economy has begun to stabilize linked to recovery in the global economy with moderation in inflation rate.
The landmark development is that the Indian citizens have voted for a stable and decisive government for the next five years under the leadership of our Hon. Prime Minister Mr. Narendra Modi.
The new government has singled out clear goals and priorities for the economy in the short as well as medium term.
The concept of ‘minimum government maximum governance’ has put into action with the synchronization of various ministries.
Since then, several executive changes have been announced to fast-track decision making, most important being the go-ahead for online environmental clearances.
The Indian Budget presented last week has laid out measures to speed economic revival and laid the road map for reaching 7 to 8% growth rate.
According to the economic survey released by the Indian government, it is expected that the Indian economy is likely to grow in the range of 5.4 to 5.9 %in 2014-15 reversing the downward trend of below 5% GDP.
We expect that stabilization in inflation will benefit the monetary policy stance and will revive the confidence of investors.
The new government is encouraging FDI across all sectors, massive investment in infrastructure, energy, renewable and manufacturing thereby stimulating both consumption and the investment cycle.
The budget also has also put special emphasis on tapping renewable energy, particularly on wind energy to achieve energy independence.
The new government has set a target to build 100 smart cities and outlined an ambitious road map for massive modernization and expansion in the railway network.
All these targets and initiatives will help in a period of high economic growth and sustainable development creating enormous opportunities for business community in the region.
We strongly believe India can play a key role in advancing the agenda of the BRICS nations and help shape a framework for greater integration and sustainable growth of the region.
I wish now to focus on point no III, Having introspected on BRICS and India in macro context, I would like to recommend a five point agenda for the consideration of our summit leaders present here.
In my view these are crucial for achieving sustainable development.
i) BRICS nations need to promote ‘greater regional integration’.
BRICS should aim for doubling the trade volumes and investment within the region in the next five years.
There exist huge opportunity for increase in regional trade, investment, technology flow and movement of people.
We need to map sector wise prevailing tariff and non tariff barriers and roadblocks and further take immediate steps to remove them.
It is important that BRICS nations provide for preferential market access and goods conditions for doing business and promote investment with a view to maximize mutual benefits.
Integration is key for job creation and for rapid and sustainable growth.
ii) Set out a ‘clear agenda on sustainability’.
Sustainability is core to my heart and I have been in the business of providing sustainable solutions for the last 20 years.
It is essential to note that sustainability and economic development are harmonious and can coexist.
BRICS nations having a relatively young population which growing and expected to touch 4 billion by 2030.
Meeting the BRIC’S future demand for material, energy, food and water, will be the greatest challenge of this century.
What’s alarming is that we have already entered an era of unsustainable resource consumption resulting into huge economic, social and environmental risk.
The governments of BRICS nations need to integrate the sustainability agenda into every stage of economic policies and practices.
Promotion of renewable energy, food security, bio diversity, resource efficiency and energy efficiency are essential for sustainable development. Europe which has adopted a “20-20-20”policy aims to reduce 20% in greenhouse emissions in the EU, raise the share of EU energy consumption produced from renewable resources to 20% and seeks to achieve a 20% improvement in energy efficiency by 2020.
Can we pledge a “30-30-30” by 2030 policy for BRICS economy, when we are the most vulnerable on the natural resource related pressures?
I view sustainability as working towards shared prosperity and inclusive growth.
The cooperation and coordination by BRICS nations in achieving the Millennium Development Goals is crucial for sustainable development.
iii). Strengthening of our financial architecture and banking institutions’.
BRICS region needs Trillions of dollars of investment in the 20 years. No doubt because of prudent policies followed by central banks, BRICS financial markets and the banking sectors have remained resilient during the global financial crisis.
We need further deepening of the financial markets and integration across countries. We are fortunate that most of our countries have a reasonably high savings rate.
The challenge is to convert such savings into investments particularly in the infrastructure space and building smart cities.
It is thus important to share experiences.
In this regard, the early launch of BRICS development bank with a contingency reserve arrangement of $ 100 billion as a safety net is a welcome measure.
Every effort is required to develop capital markets, corporate bond markets, and institutions to fund and provide long term large scale funding of projects at competitive rates for businesses in the BRICS regions.
Also we need risk bridging instruments and solutions to mitigate country and currency risk so as to access and attract FDI from the matured financial markets for the benefit of this region.
iv. ‘Driving innovation and technology’
In many of our countries, growth has largely been led by tapping natural resources, capital investment and adding to the work force.
We need to accelerate our productivity levels with the main objective of catching up with matured markets for which a strong emphasis on innovation and technology need to be in place.
Countries like Russia are great examples for promoting innovation for others to follow. Each BRICS country has their own areas of technical knowhow which we need to share.
We should thus share the best practices amongst each other I view the value of technology both in terms of economic impact as well as a solution to uplift the bottom of the pyramid.
The best example of technology, from my own experience the cost of wind energy today is at par with conventional and some places cheaper than conventional energy.
I request the BRICS leaders to create conditions for technological collaborations and exchanges within the region to provide cost effective sustainable solution to address all our social and economic challenges.
v. Shaping the global agenda’ We are now part of a Globalised world. BRICS nations must assume a leadership role in the global economic and political governance to participate and partner in creating shared prosperity for all.
There is immense scope for engagement and cooperation across various platforms such as G20, WTO, UNFCC, WHO, on important pressing themes such as climate change, energy security, food security and geo political stability.
The BRICS nations should strive for enhanced cooperation and cohesive engagement to provide a balanced perspective for the multi lateral framework and agreement.
Ladies and Gentleman, we believe that these are the five key areas that the BRICS nations need to give thrust. The Indian business community is looking forward to collaborations with BRICS governments in converting these into initiatives and making it a reality.
Finally I would like to make specific recommendations in certain areas of cooperation in business, trade and investment.
I. Agriculture and food security.
II. Infrastructure and Mining.
III. Information Technology, Biological Science, Space Exploration, Healthcare and Innovation
IV. Energy Security & Sustainable Job creation.
Most BRIC economies are traversing the path of a new energy architecture embracing wind, solar and other forms of clean energy sources.
It is thus important that we thrive to achieve energy security at all costs, and also create sustainable job creation too. Many Indian and Chinese companies are now global players including my company in providing the clean energy technology solutions for massive deployment.
Companies from these segments must therefore look at partnering with each other.
There exist specific opportunities for Russia, South Africa , Brazil to take the benefit out of this if the clean energy market is opened up and BRICS companies are incentivized.
Energy is going to be the biggest sector of opportunities in the future, not only in clean energy sources but also in gas pipeline, shale gas, oil exploration, smart grids and nuclear energy efficiency.
Arrangements such as these will provide India and China assured energy supplies and provide Russia a captive and growing market for one of its key resources.
Companies from these countries can also undertake joint projects in offshore oil exploration, development and refinement in home countries as well as third countries.
Russia can also help by sharing its expertise and technologies for reviving and improving productivities of matured fields in India and China.
India can also share its homegrown experience of wind energy (on-shore& off-shore technology) to the entire BRICS geographies.
In a nutshell, both BRICS countries should push renewable energy companies of India & China to go global, while bio-fuel should be made global from Brazil as an example.
--- To sum up….
We need collective actions and coordinated concrete efforts to make the above ideas and opportunities a reality.
We must work tirelessly with our BRICS counterparts and forge stronger partnerships to deliver prosperity and progress to our people.
The BRICS Business Council, which was set up last year, is looking at various ideas.
I am happy to be associated with this effort and would like to thank all the Chairmen from the five Chapters and especially my good friend Mr. Onkar Kanwar from India, under whose leadership the Indian delegation has joined here today.
Before I close, I would like to thank all those who have worked hard overtime to give shape to this.
I am confident that when the economic sun is setting in many part of the world, our region will be shinning with regional coexistence and prosperity.
Thank you and best wishes from India.