The Czech Republic is keen to sell not just more of its Skoda cars and bottom-fermented beer in India, but has its eyes set on grabbing a larger share of India’s market for heavy manufacturing products ranging from surveillance systems to trainer aircrafts.
The Czech minister for trade and industry Martin Kuba, who was recently in India heading a delegation of 80 companies, shared with Business Line his plans for increasing engagement with India.
Despite the trade potential that is said to exist between India and the Czech Republic, bilateral trade fell last year. Why?
You are right. After a successful year in 2011 when bilateral trade reached $1.5 billion, it slightly declined to $1.24 billion in 2012. This happened partly because of Skoda Auto India’s decision to increase localisation of their cars assembled in India.
It caused a considerable decline in import of automobile components from the Czech Republic, which traditionally constitutes our main export item to India. On the other hand, the higher local content in Skoda cars also meant a higher benefit for domestic market in India.
Another reason for the fall is stagnation in both our economies with decreasing demand for commodities.
We need a long-term strategy for exports. Therefore, the Czech Government ranks India among 12 priority countries for promotion of mutual commercial, investment and other economic activities.
India has expressed interest in collaborating in the area of heavy manufacturing with the Czech Republic. What kind of possibilities do you see?
Heavy industry is a backbone of the Czech economy. Our country has an excellent reputation world-wide particularly in automotives, machine tools and metallurgy. On the margins of my visit to India, the meeting of Joint Working Group on advanced manufacturing and heavy engineering took place.
Other meetings are going to take place soon with aim to advance our mutual cooperation. We would also like to see deeper cooperation with India in defence, especially in research and development and production of weapons systems.
We have offered India our sophisticated defence equipment, passive and active surveillance systems, radars, trainer aircrafts, all purpose vehicles and modernisation of older equipment.
India has been seeking relaxation in your country’s business visa norms and had also submitted a non-paper (informal warning) on the matter sometime last year. Any progress?
We are aware that easy access of our entrepreneurs to business visas in our two countries can strongly facilitate mutual trade exchange, but this agenda falls under the Ministry of Interior and Ministry of Foreign Affairs.
I had an expert in my delegation from the Interior Ministry who had vast discussion with representatives of business sector about the visa issues and their concerns will be taken into consideration during our bilateral visa dialogue.
There are no direct flights between India and the Czech Republic. Are there any plans of redressing this situation?
Currently, all travellers between the two countries have to travel through Frankfurt, Vienna, Paris, London or Dubai. We would highly appreciate establishment of direct flights so that both entrepreneurs and individual travellers would benefit.
Discussions are on with couple of airlines already flying from India to Europe such as Jet Airways and we hope that direct flights would be established soon to at least one of the Indian cities.
What are your expectations from the India-EU free trade agreement?
The EU is India’s largest trading partner. I believe that conclusion of Bilateral Trade and Investment Agreement will open up our markets in goods and services and thus significantly help in boosting trade.
The Czech Republic particularly hopes in reduction of customs duty on cars, wines and spirits to India.
Talking about wines and spirits, do you see more scope for your alcohol industry in India?
There is always more scope for our products in India as the level of our trade hasn’t reached its full potential. With respect to alcohol, the best chances in the Indian market are for Czech beer and wine.
The beer produced in the Czech Republic is in its vast majority a bottom-fermented beer such as our flag-ship beer Pilsner Lager.
Many of our breweries are viewing India as their potential new market. World-famous “Budìjovický Budvar” beer is already available in India and hopefully others will follow. Czech companies have also a long tradition in developing brewing technologies and are able to deliver complete industrial plants or provide brewery reconstructions.
Do Czech automobile companies have expansion plans in India?
Skoda Auto, a part of auto conglomerate Volkswagen, might hopefully increase its production and eventually commence exporting cars manufactured in India to neighbouring markets in the future. We also hope that Tatra trucks, which are being assembled by BEML in India after importing spare parts from the Czech Republic, will continue to be demanded in India in even higher numbers.