“The playing field should be even” March 2018 issue

“The playing field should be even”

In recent years, bilateral trade between the two has significantly increased making India Finland’s fourth-largest trading partner in Asia. Nina Vaskunlahti, Ambassador of Finland to India, discusses why India is a significant trading partner and how a possible customs tariff increase for certain telecom products and termination of bilateral investment protection treaties at India’s end can be counter-productive to trade.

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TDB: Finland and India have traditionally enjoyed warm and friendly relations. Despite this, the Finnish investments in India have remained at a modest level. Even trade between India and Finland has not reached its true potential. Where lies the concern?

Nina Vaskunlahti (NV): There is – and there always has been – a great potential for more Finnish investments in India. And that holds true for bilateral trade as well. Having said that, so far, some other countries in Asia have been more competitive in attracting Finnish investments. Usually, the amount of investments has a certain correlation to the amount of trade. The potential investors’ main concern is the predictability of the business environment and, of course, the competitiveness of the market.

TDB: The Indo-Finnish merchandise trade is dominated by Finland. For that record, India’s President Pranab Mukherjee on his recent visit to the Nordic countries – Norway and Finland – suggested doubling the current level of our bilateral trade, from €1 billion to €2 billion, over the next three years. Can you share the roadmap you envisage to reach this target?

NV: The amount of trade can be doubled – or tripled – provided the overall environment is conducive to business. The Finnish economy is an open economy and thus our wealth largely depends on trade. We are firm believers in free trade. We would be very happy if European Union (Finland has been a member of the European Union since 1995) and India were to accelerate the free trade agreement negotiations, which unfortunately have been more or less in a standstill? for far too long.

We also give importance to investment protection agreements. The recent decision of the Indian government to unilaterally terminate bilateral investment protection agreements is a regrettable decision. A solution must be worked out.

"70% of power plants in India use Finnish automation systems"

TDB: Given the strengths of the two countries and the obvious complementarities, experts feel that Indo-Finnish cooperation can excel in sectors like R&D, education, science and technology, clean technologies, biosciences and pharma, renewable energy, etc. Tell us about your efforts in speeding up collaborations with India in these sectors to create win-win propositions for both the nations?

NV: I fully agree that Finland and India have several complementarities from which we both can benefit by creating win-win situations. Finnish companies have a lot to offer in clean technologies, IT-based solutions, healthcare and modern logistic solutions. And then we should not forget about the high level of mechanical engineering and environmental-friendly mining solutions that Finland can offer India.
To give you an example of Finnish automation solutions, about 70% of power plants in India use automation systems developed by a Finnish company. Also, when you think of operating in Arctic type environments, you should think of Finland. One-third of Finland is located above the Arctic Circle and we have developed solutions that operate in those circumstances.

TDB: Currently, there are more than 100 Finnish companies operating in India and many of them are leveraging ‘Make in India’ initiative. What are your views on such initiatives including ‘Skill India’ and ‘Digital India’?

NV: We surely welcome the Indian government initiatives and programmes as they offer ample opportunities to Finnish companies. The companies are happy to ‘Make in India’ but the playing field should be even. The latest news we hear is of a possible customs tariff increase planned by the government for certain telecom products. This is certainly not very encouraging.

"Finland serves as an excellent gateway between the East and the West"

TDB: Dozens of Indian companies are operating in Finland in diverse sectors. What makes Finland an ideal investment destination for them?

NV: Finland truly is an ideal investment destination for Indian investors. We have a predictable business environment with a strong credit rating. Finland is one of the the most stable countries in the world. We have an effective rule of law and low levels of corruption. Indian companies can benefit from the vibrant start-up scene and a unique ecosystem that fosters R&D.

Finland is at the top of international rankings when it comes to business. The World Economic Forum’s The Europe 2020 Competitiveness Index places Finland as the most competitive country in Europe. Our workforce is experienced, international and well-educated.

Also, with the fastest flight connections between Europe and Asia and high-quality infrastructure for virtual networks, we serve as an excellent gateway between the East and the West. Then we also have the ultra-fast optic cable from Finland to Germany that enables the world’s fastest data connections to global networks.

One very topical detail is that Finland is a forerunner in the circular economy, which focuses on reusing materials and creating added value in products. This is a huge business opportunity for Indian companies. And, it is easy to go and check all this for yourself – the direct Finnair flight from Delhi to Helsinki takes only six and half hours!

TDB: The Indian government has recently announced foreign direct investment (FDI) reforms aimed at boosting greater investment inflows into the country. Are Finnish companies grabbing the opportunity?

NV: India’s FDI reforms, especially on administrative procedures, are admirable. As they are recent, it is too early to evaluate the results. On the other hand, the termination of bilateral investment protection treaties can turn out to be counter-productive when the the aim is to attract foreign investments.