Dr. Aditya Jha’s (CIF National Convenor) address to the Standing Senate Committee on Foreign Affairs & International Trade on issues as he sees them with respect to the rise of India and the implications for Canadian global policy.
THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
OTTAWA, Wednesday, April 14, 2010
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:15 p.m. to study the rise of China, India and Russia in the global economy and the implications for Canadian policy.
Senator A. Raynell Andreychuk (Chair) in the chair.
The Chair: Honourable senators, we have before us today, from the Canada India Foundation, Aditya Jha, National Convenor. He is here in two capacities. He is also President and CEO of Karma Candy Inc., a contract manufacturer of branded and premium private label chocolate and candy products. He cannot sell it to us, so there cannot be a conflict. He is also the founder of the POA Foundation, which is a charitable Canadian private foundation that supports projects based on three distinct values: the promotion of accessible and high-quality education; the nurturing of entrepreneurship; and the strengthening of global civil society and governance. The foundation takes a special interest in nurturing prosperity and financial independence amongst Canadian First Nation communities and individuals. I have pointed out to Mr. Jha that we are in the Aboriginal Peoples Committee Room. However, today, I understand he will address the issues as he sees them with respect to the rise of India and the implications for Canadian global policy.
Aditya Jha, National Convenor, Canada India Foundation: Honourable senators, I thank you for this opportunity to share our views with you for your study on the rise of India. I am here to speak on behalf of the Canada India Foundation, which is exclusively focused on advocacy for public policy in the Canada-India corridor that addresses the mutuality of interests for both countries.
My presentation will be in two parts. I will speak briefly about the unique opportunity India represents for Canada. I will then suggest some bold public policy initiatives that Canada could take to move away from our incrementalist and so far safer traditional approach of engagement with India. I will not restate some of the suggestions that other distinguished witnesses have already presented before this august committee.
The first portion of my presentation includes some facts. In India, 50 per cent of the population is less than 23 years of age. Because of a larger working age population, the country’s savings rate as a proportion to GDP was 34 per cent in 2008, and it is expected to be 40 per cent by 2015. In 2020, the average Indian will be 29 years of age, compared to 37 years of age for China and the United States; 47 years for Western Europe; and 48 years for Japan. Because of the younger working population, India will spend much less on the social cost of dependents.
Around 80 per cent of India’s GDP is due to domestic consumption, and there is a massive infrastructure deficit in India. The Government of India has initiated progressive programs, policies and initiatives to attract investment in the infrastructure segment. It is considered the largest infrastructure investment in the history of the world. The significantly lower number of dependents in India will enable a new phase of what we call guilt-free consumption. A conservative definition of the middle class by the McKinsey Global Institute suggests that there will be 50 million middle-class individuals who will have the purchasing power parity of $30,000 to $125,000, and that is expected to grow by 2050 to 500 million individuals. These multiple forces will drive the growth rate of 6 per cent for India until 2050, a trend which, if happens as projected, will be unique and unprecedented in the economic history of the world.
Starting this year, China’s working age population will start falling. It is becoming grey before it becomes rich. By 2040, the number of pensioners in China will be second after India’s population.
As India is on this phenomenal growth path, Canada can boast home to 5 per cent of the Indian diaspora in the world, and almost 25 per cent of the affluent Indian diaspora lives in Canada. The Ryerson University study found another unique distinction. Unlike Indo-Canadians whose affluence has occurred through labour market outcomes related to high human capital assets, most Chinese Canadians have become affluent in Canada in a unique way, as most of them regularly use non-official languages at work. This suggests that the Chinese ethnic economy in Canada has provided them with a veritable alternate path to success. It clearly suggests that the large number of Indo-Canadians since the mid-1990s have become successful in mainstream Canada, and they can be the best source of bringing mainstream Canada to India and India to mainstream Canada.
For India, Canada has many similarities: being an English-speaking, democratic country; having a similar legal structure; being a potential reliable source of commodity needs and highly technologically advanced in energy and environment management; and having one of the largest Indian diaspora populations. The elite of Indian civil society view Canada as a voice of reason on the world political stage.
Even with all this and the attractive background for serving the mutuality of interests of both countries, our trade with India is pathetic, at 0.5 per cent of the total trade, while Canada’s trade with China is 6 per cent of the total trade.
Honourable senators, the bilateral trade between China and India will be $60 billion in 2009-10 and is growing 50 per cent per year-on-year basis. It is expected to be $100 billion in the next three years. This phenomenal growth in bilateral trade is the outcome of just a decade of new policies and trade focus. This highlights the fact that even bitter enemies have been able to make spectacular bilateral gains.
We in Canada seem to have an official line focused on facts like we are not counting our trade numbers properly and our growth is spectacular compared to the last year or so. This is the lame excuse from those who are only capable of leading us to mediocre performance. If export to India goes through middle countries for Canada for tax and logistical reasons, then a similar thing happens for trade with other countries as well.
Let me highlight some of the new initiatives for deepening our bilateral relationship as the second part of my presentation.
The biggest asset and the least utilized for Canada is how it can leverage its existing, large Indo-Canadian population and its largest growing segment of human capital. How will it leverage its future immigration policy, keeping in mind the Canadian economic agenda and ensuring that our new immigrants are targeted and will be ready to serve the needs of Canada?
Organizations like the Canada India Foundation have made a serious commitment by signing a $10 million endowment with the University of Waterloo for starting a public policy centre exclusively focused on the Canada-India corridor. How can the governments at different levels bring academia, public policy people, businesses and civil society together to pool their resources and create platforms for a multi-agency, collaborative framework for a serious engagement? There is a strong need to establish an India foundation where we can involve the Government of India with other above-stated Canadian stakeholders.
In the world of a changing economic centre of gravity, it makes perfect sense to move away from the bureaucratic appointment of the High Commissioner to India. Rather, we should send a strong message that Canada is serious in engaging with India by making the High Commissioner to India a political appointment.
The trade commissioner’s role is highly important but when the trade commissioner is housed inside a heavily fortified embassy, it creates a barrier of access and also makes the trade commissioners think that they have some special status. Subsequently, they behave like representatives of an elite diplomatic group rather than a group of individuals that is ready to hustle for business.
It is worth considering embedding individuals from businesses and chambers of commerce on a secondment basis. Even in an emerging country like India, the top brass of the chamber of commerce like the Confederation of Indian Industry have weekly access to the prime minister to advice on trade-related matters. These organizations have been given a significant role with foreign visits of ministers and especially the prime minister.
The absence of Canada’s brand in India is a major stumbling block for a stronger relationship. India was also supposed to be slow in marketing itself and reaching out. India took the progressive step of forming the India Brand Equity Foundation, IBEF, a public-private partnership for the Ministry of Commerce, the Government of India and the Confederation of Indian Industry for building a credible global Indian brand. In 2006 at the World Economic Summit in Davos, Switzerland, India enlisted top Indian corporations, Confederation of Indian Industry and government officials and gave matching grants of $4 million each. That launched India Everywhere, a massively successful branding campaign. We should consider seriously a similar kind of partnership if we want to move away from the incremental path of engagement with India.
We have seen several government led visits to India but rarely have there been a consultative presence of non-bureaucratic individuals. Businesses have been present there in a symbolic way and for the photo opportunities. However, the role of the chamber of commerce and businesses in charting the goal and planning the details of the trade mission is generally seen as undesirable and interfering.
India has a larger part that is starving for the partnership, investment and trade, but almost all of our trade visits provincially or federally are destined for major cities like Delhi, Bangalore, Chennai and Mumbai – and Chandigarh for political reasons. It is amazing that we are joining the queue and lining up behind only those places that receive a great deal of worldwide attention. They are tremendously busy and we have not figured out how we can carve a niche for ourselves in other provinces of India. In those provinces, where we will be able to build lasting relationships, we will receive a red-carpet welcome and special concessions.
Conventional wisdom dictates that the lasting partnerships between nations begin with strong relationships with public figures, opinion builders, business leaders and civil society leaders. We should be extra careful about the sensitivities and the things that can become irritants for each another. As public policy leaders, parliamentarians have extra responsibility to be aware of such sensitivities.
Our local political considerations sometimes need to appease the fringe elements and that should not overshadow what is good for Canada in the long run. We should not give in to local extreme groups just because they are louder. We need to see how the same community issues are relevant in countries like India as sometimes small immigrant groups tend to overplay the issues which may have already died down in the native countries, as the country and its people may have moved on. India is very sensitive to the issues of terrorism and matters related to sovereignty. We should exhibit due consideration and respect for the same.
It would be highly desirable if our various levels of governments considered setting up a public-private India investment fund to encourage Canadian ventures in India. In a decade or so, India will need expertise and services in all segments of its public and private life similar to previously developing societies. It is important that Canadian businesses and institutions establish local footprints so that, when India needs those specialized goods and services, we are present at the local level.
Singapore’s sovereign fund invested close to $400 million in Bangalore Software Park more than two decades ago. Another example is the Warburg Pincus investment of $1 billion during the early revolution of telecom in India. That investment netted them more than four times the return within less than a decade. They are left with a sizeable investment. We suggest that there is strong need of public-private partnership to define the engagements architecture for India and Canada.
Thank you so much for giving this opportunity to the Canada India Foundation.
Senator Nolin: Thank you, Mr. Jha, for visiting us. Recently, the Indian government tabled its budget. Three areas were quite interesting. The first one is that they will introduce a new GST. Is that correct?
Mr. Jha: Yes.
Senator Nolin: They are talking about the details of that GST. Second, they are focusing on the reform of regulations concerning foreign direct investment. Third, they want to divest their stake in Crown corporations. Can you give us more details? Who will benefit from that divestment?
Mr. Jha: I have not studied the Indian budget, but I have some comments, especially the last issue. India has many public sector companies. Divesting them will free up a lot of money for India to invest in other areas, especially in the infrastructure segment.
The realities of India, because it is a multi-party government with lots of push and pull and all the public sectors are unionized, I do not know how much success they will have in that area. However, if it happens, it will give a lot of funds for India and foreign companies to come in and help them with that investment.
Senator Nolin: As a Canadian, what is your reaction to the fact they will introduce a GST?
Mr. Jha: Our organization does not have any stated policy on that subject, but governments do need funds to run their programs. Their team has been studying the Canadian GST, and I met with the team when they came here to do that.
Senator Nolin: You probably helped them.
Mr. Jha: There must be some national uniformity of tax and how the revenues will be shared. India is lacking in that area.
Senator Nolin: Are you aware of the rate of that tax?
Mr. Jha: No, I am not.
Senator Nolin: Will there be an exemption as we have in Canada on food? You are not aware of that, are you?
Mr. Jha: I am not qualified to answer that question.
Senator Segal: I want to take you to page 4 of your presentation, which I found most helpful and thoughtful. I do this clearly aware that our distinguished chair was a Canadian high commissioner abroad and was not appointed for political reasons but because of her immense background, expertise and service in the Department of Foreign Affairs and International Trade prior to that appointment.
I am interested in you suggesting that is not the kind of person we should appoint. Rather, we should appoint a political or a business person. I want you to follow that logic with me. We had the privilege of hearing from India’s previous high commissioner here at this committee. I would not have made a formal distinction as to whether he or she was someone who came out of the Indian public service or foreign service, or if he or she came from business. If the Indian government had said they wanted him to represent India’s interests here in Canada, I assume that he or she would have been a person of immense competence, ability, skill, sagacity, judgment, wisdom and all the rest.
I am interested in understanding why you think a public servant or a long-time diplomat with some consular experience in India or other experiences in the region might not be appropriate and why only a businessperson is appropriate. I would like you to make the distinction. What criteria for judging that business person would you want to see the Minister of Foreign Affairs for Canada impose prior to making that kind of appointment?
Mr. Jha: First, I am not questioning the appropriateness of the appointment of any individual. I am saying that it would be much more appropriate, given the situation where India is and what potential India has, for that person to be a politician or business person.
When you listen to ambassadors like Mr. Gavai, you have to be one of the top 50 in India to be selected in the foreign services. That is the kind of examination they go through, and nationally only the top 50 are selected for the foreign services. It is one of the toughest examinations in India. I do not mean to belittle them. We have had illustrious members from our diplomatic core.
Let us look backward. In less than a decade, China has gone to a $60 billion trade with India, and there is a great deal of animosity between India and China. We are happy, and we keep saying that $4 billion is at least 20 per cent more than the last year, or our numbers are not counted or highlighted. The results speak for themselves. Even if you have the most intelligent and qualified person, we are in a world where results demonstrate if that is the route to go or if we should try something different. It is possible that the new thing will not work, but Canada has seen many political appointments in the diplomatic core for the U.S. and also for the U.K. India is important enough now and I think it will send a positive message. Our results and past performances on the trade front are not acceptable and should not be acceptable. We need to try something different, and that is why I make this suggestion.
Senator Segal: Your document makes serious and constructive suggestions of what we can do to expand the Canadian trade opportunity with India. Implicit in that is a criticism that we have been doing it all wrong, or mostly wrong, or not as right as we might have done. To put on your Canadian hat, it would be helpful to this committee if you could be as explicit and specific as you might care to be about what Canadian business and government have missed the boat on and what we have to reorganize ourselves to do a better job of. Is it a matter of policy? Is it a matter of laziness? Is it a matter of it is far away so we do not care? Is it a matter of organization and structure?
I know that this committee will want to take seriously your testimony, with others, and recommendations that might emerge from there. I would be interested, because of your unique position, if you could share with us where you think we could make the most difference in the kinds of recommendations that might emerge, including being frank about what has not worked in the past.
Mr. Jha: Thank you so much for giving me this opportunity and asking that excellent question.
I am a business person. I have been in Canada for 15 years. I have been in business for the last 10 years. What has benefited me tremendously is my ability to meet and consult with groups of people. As a business person, you are much more inclined to do that. In a bureaucratic setting, you have strict protocols in the way you do things. It is not necessarily that those protocols are not right, but sometimes they are restraining.
I do not know if you had a chance to go to the Canadian High Commission in New Delhi. It is like a fort. This is the second fort, after Red Fort in Delhi. Imagine if you are passing by and you want to meet with the trade commissioner, and you have to jump through all the hoops. The walls are thicker than the safe walls at the Royal Bank of Canada. That may be needed from a consular point of view, but from a trade point of view, it is not. I suggest that we make it a much more open place that invites people to meet and share ideas.
Secondly, I believe we should embed business people and a chamber of commerce with trade commissioners. I am not saying to only embed the ethnic chamber of commerce. The Canadian Chamber of Commerce, Ontario Chamber of Commerce and Canadian Council of Chief Executives are excellent organizations. Let us get them there. Let us collaborate. Let us figure out why it has not worked thus far. Such a great country like Canada has done so well in many areas, but with India, $4 billion? We should send a message that it is totally unacceptable. We should have something like a sales quota target and say, “If you do not perform, you cannot go there.” I am talking about one extreme, but I would say that the results will drive me to make a position about who should run it. The next person should try and, if that does not work, then try something else.
Senator Fortin-Duplessis: Mr. Jha, I want to tell you how much I appreciate your appearance before our committee to share your views with us.
The province I represent, Quebec, is fully supportive of a free trade agreement between Canada and India, which would open extraordinary opportunities for our two economies.
In your excellent recommendations, you mention that the Canadian life and health insurance industry encourages our government to try to negotiate new trade agreements. Indeed, India has some very high tariffs. In the automobile industry, for example, foreign manufacturers who want to sell on this market are subject to tariffs as high as 40 per cent. One observes that tariffs are much lower in those sectors where India has pressing needs, such as infrastructure construction. Your country has developed an ambitious plan that would see $500 billion invested over the next 5 to 10 years.
In the view of the association you represent, what should be the scope of any trade agreement between India and Canada? Are there sectors that we Canadians should not try to get into?
Mr. Jha: I will answer the last question first. Our suggestion is that we should avoid the segments where we are able to touch the large population in terms of adversely impacting them or where it can become a politically difficult decision for the government of India to make. It is not that they do not understand or want to do it, but the realities of democracy will not allow them to do it.
However, there are areas in which we can have tremendous results. One is in the area of energy. India needs help in this area and Canada has the technology and the expertise. Mining is another major area. Our organization has focused on those two areas. Last year, we had an energy conference, and top officials and top business people from India came. This year, we are doing one on metals and mining.
Education is a third area where we can have tremendous presence. The other speakers who appeared before the committee spoke about how a country like Australia has the lion’s share of educational revenue from India and we have the smallest, not even 3 per cent or 4 per cent of that.
Our suggestion is to be engaged. Let us build up a close relationship with multiple layers. It is not about one bureaucrat to another. If we want to engage with a country like India, it will be through targeted areas of public policy. Senator Di Nino has gone to India several times. I urge you individually and collectively to go there and target some individuals, not necessarily in Bombay or Mumbai or Delhi, but go to smaller provinces where there will be literally not only a red carpet but also the elephants sent to the airport to greet you. I am joking about that, but you will get a wonderful welcome. Let us take that segmented approach for closer relationships and be sensitive about what they can easily do. Let us go after the low-hanging fruits. Let us not lecture or argue with them.
Senator Finley: Welcome. The Canada India Foundation has recommended, for example, that we strike a strategic partnership similar to the one that exists between India and the United States. Could you describe what benefits you would see with an immediate strategic partnership? Second, please lead that into a slightly broader discussion about what barriers you might see to a free trade agreement between Canada and India?
Mr. Jha: First, moving from multilateral agreements to bilateral agreement has been a major development.
There are a couple of things that we could do. If you see the U.S. with the issue of Kashmir or some of the internal divisive issues, America is not hands-on with that. We should be sensitive to that because we have a larger population here which may have different views, as I mentioned in my initial introduction.
Senator Finley: Could this be like Gujarat?
Mr. Jha: We singled out that one issue. We had no reason or stated policy but we were totally disengaged. Gujarat is a province that has the largest growth. It had more than 12 per cent growth annually, year after year. It has one of the most industrious groups of individuals, even in North America. About 40 per cent of the three-star hotels and below in North America are owned by this group of perhaps 100,000 people. It is that kind of group and we did not want to trade with them. We are still hesitant to do so.
We should leave some things with the country where it belongs. The political things belong there. Let us respect their democracy. If the people of that country elect someone and no guilty charges have been proven, we should not disengage.
I am glad that Senator Di Nino and other individuals have gone to Gujarat. We need to get engaged like that with India in a targeted and segmented way.
Our Canada brand is very weak in India. The key thing is not about what policies will help but what do we need to do so that the Canada brand becomes visible, credible and known? From the immigration point of view, there is lopsided immigration. The rest of the province does not even think much of immigration to Canada; the rest of India does not think that way. They only think about migrating to America. Even for education, most of the students go to America or Australia. Now that there are difficulties in America, they mostly go to Australia. We need to take the kind of practical approach that Australia takes.
Senator Finley: Would that be part of a strategic partnership?
Mr. Jha: Yes. I think that free trade would be desirable but we are still signing off on FIPA, the Foreign Investment Production Agreement. Free trade has many implications. In Indian democracy, the presence of leftist parties and the fact that India is so impacted by gun-toting leftist groups, which are the largest in the world, are big issues for them. They will have to be careful.
We should be helpful in those areas where we benefit the most and they also find it easy to do.
Senator Stollery: You mentioned Gujarat, I think, but it sailed over my head. You said 100,000. What was that about?
Mr. Jha: In North America, there is small population of people of Indian origin who are from Gujarat. This is the most prosperous provinces in India. In the hospitality industry, that group owns almost 40 per cent of the hotels in North America. They are worthy of a case study.
Senator Finley: What was Canada’s disengagement from Gujarat caused by?
Mr. Jha: First, there was no stated policy. This is another thing about Canada: We do things but we do not have a stated policy on it. It was a quiet disengagement. In the U.S., there are all kinds of lobby groups and one group said we should disengage because the premier of that province was alleged to be involved indirectly in the Hindu Muslim riot. There was a commission which did not implicate him. He is a premier and was re-elected by a massive margin again; the local political parties tried that allegation as well. The U.S. officially disengaged. We quietly followed that but we did not say it publicly.
We are thankful for the initiatives of this government. We tried to reason with that but it is not about the chief minister of the province. It is about the province, which is the most industrious and prosperous province. It has yearly growth of 12 per cent or more. How can we not engage with that province?
Senator Stollery: Did we not engage? I am not trying to do that but this has still has gone a bit over my head. I did not know that we had done anything.
Mr. Jha: We have now opened up a trade commissioner’s office in Gujarat.
Senator Jaffer: I will take you to another topic. I was interested when you talked about not having ethnic chambers of commerce at the trade mission. There is no separation in our country; we are all the same. Why would you not be keen on people who have knowledge of India to be in our trade offices? They can only be an asset to us.
Mr. Jha: I think I may have miscommunicated. I said that we must engage chambers of commerce, but I assumed there would be reservations sometimes about ethnic chambers of commerce because they do not engage seriously with anyone. I said maybe from the pecking order point of view, even if they do not want to involve ethnic chambers of commerce. We do have sending-off parties before trade missions, but there is no consultation about the agenda, what we should do, who we should meet and how being involved can benefit effectiveness. I do not see that kind of involvement of chambers of commerce on trade missions. It is more from the office of whoever is going there. They know the political business, but we have a lot to contribute to trade missions.
Definitely, we would like the Canada India Foundation, the Indo-Canada Chamber of Commerce and the Canada-India Business Council to be actively involved. These are the organizations which are seriously engaged.
We signed an MOU to put in a $10 million endowment at the University of Waterloo because we recognize that intellectual bandwidth and proper advocacy around that is lacking, so that we get deeply engaged in the Canada-India corridor.
Senator Jaffer: A number of times, you mentioned the United States. Besides the U.S., is any other country engaging with India in a more aggressive way than we are? If so, what are they doing correctly?
Mr. Jha: Even Chile does more trade than we do. Even Scandinavian countries do more. The United Kingdom is deeply engaged and China is massively engaged. It is amazing that, if there was a choice between China and someone else, Indians would buy from other countries. It is not that there is anything wrong, but there is this patriotic feeling and a history there. However, business realities have brought both the countries together.
Singapore is deeply engaged. A small country like that is massively engaged. Twenty years ago, they invested $400 million in the software park, as I mentioned. They put their money in Bangalore, which has become the “silicon valley east.”
Senator Jaffer: Mr. Jha, you have said a number of times that we need to be deeply engaged and I agree with you. What are some of the things we need to do to be deeply engaged?
Mr. Jha: We need to embed businesses and chambers of commerce into the public policy formulation and execution; that is number one. We need to identify the key areas where we will have the least resistance, like mining and metals, energy and education.
Think of agriculture. India needs massive help in this sector. We have 46 per cent cultivatable land, compared to 10 per cent in China, yet India produces less. We can benefit massively from an engagement in agriculture. Food security has become a matter of national security for India. Canada can help India in a major way. We did it in the green revolution days in India. We were the ones who helped them. This is the second time we need to help in that area.
We should think about this investment fund, which should include private organizations. I am just throwing out a number, but it could be a $5 billion or $10 billion fund where private organizations put $5 billion and we have $5 billion from the provinces and the federal government, and we would encourage mainstream Canadian businesses to invest in India. Today, we do not seem to do the electronic fare implementations of buses and trains like in Malaysia or Singapore, but all those things will need to be implemented in India. Who will do it? Again, will it be someone else, or we will have some local footprint there in India?
Senator Jaffer: You are very much involved in the Indian diaspora. How do you think the Indian diaspora should be engaged so that we might increase trade with India?
Mr. Jha: The Indian diaspora should be more engaged in helping and guiding the fear of the unknown that many Canadian businesses have. The bureaucratic setup we have is, “Do not ask; I do not need your help.” We can play a significant role there.
Senator Smith: It is good to see you again. As you know, I have some personal and business interests and great confidence in India, and also in your organization. Senator Di Nino and I, with several other parliamentarians, had a great dinner with the Canada India Foundation in Toronto, technically Mississauga, last week, and it was an excellent event.
I have great confidence in the ability for trade to take off. A large part of it has to do with the entrepreneurial connection in Canada of Indians who are astute and successful businessmen. I also applaud your University of Waterloo connection. I know there are other ones as well. These business school connections are an excellent way to strengthen those ties.
On page 6 of your submission, you suggest that the “various levels of government consider setting up a public-private India fund to encourage our ventures in India.” You give the example of Singapore’s sovereign fund. I suppose part of the challenge there is that it is great for us and the department to have offices there for trade and support, but in terms of investments, are you talking about investment dollars coming from governments, or are you talking about basically a catalyst role that triggers it off from the other sectors? Was that the point you were making? It is a little tricky if you decide we will pick one country and put investment dollars in there.
Mr. Jha: Thank you so much for your kind remarks about our organization. What I meant was a venture fund. I suggested that it could be a private-public fund. Let us say it is $20 billion from the different levels of government and $20 billion from private people. This becomes a venture fund. When a business person brings forward an opportunity in India, we would have a venture fund to support Indian business opportunities here. We do so only when we see a good return coming from this money. It is not a government investment or subsidy. It is a good return investment fund. The business people know that the likes of the Royal Bank will not fund them for investment in India. Maybe we should give that fund to EDC or EDC and private people together so that they have more money available to go and support businesses or some of the other initiatives in India.
Senator Smith: The catalyst role and the support of the department is a little easier. Once you start investing in one country, it is a bit of a precedent, and there might be a long line-up at the door.
Senator Finley asked about where we have missed the boat. That is the sort of thing we really need to hear from you. Whenever you hear of a situation where somehow something did not happen and we missed the boat, we would like to hear about that. It may not be on your mind today, but for the future on an ongoing basis.
Mr. Jha: The Canada India Foundation will be submitting a formal submission at a certain stage to the committee, and I am grateful for that chance, although I may not be able to answer all the questions today.
Senator Smith: Thank you very much.
Senator Di Nino: I should confess that the witness and I have been friends for a long time. Senator Smith referred to the latest opportunity that we had to exchange some thoughts.
Senator Segal: We can forgive the witness.
Senator Di Nino: That is a very good point. I want to put on the record as well, Madam Chair, that my eight visits to India have all been as a private citizen and not in any capacity dealing with government or Parliament.
I want to pick up a little bit on some of the comments about the potential opportunities that the witness defined for Canada. Would you agree that in areas such as infrastructure and transportation, the need for power in India is huge, pretty well all over India, maybe not in the north, but pretty well central and south, and even agricultural? These are all areas were there can and should be additional resources put in to explore opportunities for mutual benefit.
Mr. Jha: Senator, thank you again for your kind words about our organization. I agree with you that there are these segments where India has a massive appetite. Recently, the minister of transportation and infrastructure visited Canada, and he eloquently presented how much India needs Canadian investment, especially in the area of public-private partnership. We have that expertise. Our companies have that expertise. There is some inertia. We have to find out why we are not that aggressive. What do we need for our companies to go to India and get that business? Where can our governments help? India has had spectacular growth, even last year. The fastest growth was in Bihar, the poorest province in India. They are building roads like no one’s business, and we could be there.
I agree with everything you said. There is massive opportunity. Each area has some opportunity or the other. As I said in the beginning, we need to choose a few areas where we will be the natural and easy choice. It will be easier for India to accept us and for us to execute our business interests.
Senator Di Nino: My visit to Gujarat last year after the Chennai visit for the Parvasi conference was quite an eye-opener. It was impressive that everywhere I went; the word “Canada” attracted a lot of attention. It certainly was not me, because I was not a known person in that sense.
There is a tremendous appetite to have Canadians participate in some of these business opportunities. I was given an opportunity to meet and discuss bilateral relations, even though, as I said, I had no official capacity. There were numerous business opportunities from some very highly placed industrialists and investors, including Chief Minister Modi, whom I met on two occasions. For my colleagues, I was asked to address the conference and I have never seen so many people in one room: There were 30,000 people. I thought I was addressing a city.
The reason I mention that is because Canada’s presence was missed. There were very few Canadian companies present.
Is it something that we should be doing a lot more of? I know you have said this already, but I have passion for this country and for the opportunities that exist. I do not think that either the government or the business community is putting enough resources into the research and development and the exploration of opportunities that exist in India, particularly in Gujarat, which will lead India as the engine of its growth.
Mr. Jha: I did not mention something when I was reading my brief. I find when I go to Canada-India events and presentations at different levels, we are still in the PowerPoint mode of engagement. All of it is lots of talk. We need to move into the project plan mode. We know things. How do we execute them? Who will do them? What are the time lines? Are you the right person to do it? That is lacking in the whole thing.
On top of that is the Canadian brand. A long time ago I remember hearing David Letterman saying that Canada is the nice neighbour you like but never invite to parties. That is the kind of thing I mean. We need to be invited to the party and that will happen with our brand, where we have established areas of engaged focus.
In addition, there is inertia in our country. Whatever inertia is here, we pass along anecdotes and information in bits and pieces. All that is bothering us and the inertia is holding us back. How far do we push and how do we have one or two major wins and how do we celebrate some company’s success in India? If Sun Life has a very successful entry in India, we need to celebrate that nationally and prominently.
Senator Fortin-Duplessis: My second question is about security. Recently, on April 6, there was a massacre of 76 members of security forces who were savagely killed by Maoists militants in Central India. This is one manifestation of the security threat that still exists despite a military offensive launched last year in order to eradicate the rebellion. Arguing that the security of all of India is now threatened, the media and the opposition in India are pressing for a harsh and quick government response. An article published in the Hindustan Times even claims that if India continues to lose battles, it will lose the whole war. It is reported that there are between 10, 000 and 20,000 Maoists. They claim to fight for landless peasants. Mainly active in the poorest states of India, they appeal to villagers who do not share in the benefits of growth.
My second question is about security. Recently, on April 6, there was a massacre of 76 members of security forces who were savagely killed by Maoists militants in Central India. This is one manifestation of the security threat that still exists despite a military offensive launched last year in order to eradicate the rebellion. Arguing that the security of all of India is now threatened, the media and the opposition in India are pressing for a harsh and quick government response. An article published in the even claims that if India continues to lose battles, it will lose the whole war. It is reported that there are between 10, 000 and 20,000 Maoists. They claim to fight for landless peasants. Mainly active in the poorest states of India, they appeal to villagers who do not share in the benefits of growth.
Could you tell us more about the origin of this violence in those places and what the reasons are? I imagine you would not advise Canadians to go and do business in those areas.
Mr. Jha: Canadian businesses are involved in areas of the world where even those countries would not want them to be when it comes to mining. We have done it for years and years, so we have already shown that industriousness.
India has a serious Maoist problem, but India gives one hope. In the 1970s, there was a major issue in the West Bengal. It looked like the Naxal movement would overpower everything but India put it to rest completely. We saw Punjab boiling in the post-1984 era. Today, you see Punjab as one of the most peaceful states.
India’s democracy is its major strength, but that is the biggest hurdle it has because there are a billion-plus individuals. The agriculture sector engages the majority of the population. What we all talk about – the types of businesses – does not touch the majority of Indians. That is why I tried to highlight that agriculture is one area. For the benefit of peace in the world, it will be very beneficial business wise and otherwise that we help India in agriculture.
How can India use 46 per cent of cultivatable land and have such poor productivity? China produces more from the 10 per cent of the land than India does from 46 per cent.
For historical reasons, there is poverty, and I believe that if you curb violence with violence, that begets more violence. We think that security forces will go and do it, but that will not work. Prime Minister Singh has put greater emphasis on rural development. You may have seen that, in the past few weeks, they have passed legislation that every child has to go to school. It has become mandatory. The budgets of the municipalities are now the largest in India. They have mandated that only women can be the heads of many village councils. When you live in a society where the representative participation of the larger percentage is not there, then there will be problems. It happens in every society that there are some abnormalities. You try to correct them. There will be further deterioration during the transition period. However, countries like India have more resilience.
This country is a miracle. All the indications of where democracy can work is that you must have $5,000 per capita income. All the best books say democracy will not thrive otherwise, but here you have a country where it will take some time to reach per capita income of $5,000; but still there is a thriving democracy. More than that, the civil institutions of India – judiciary, election commission – are the models in the world.
India’s biggest problem is the Naxal movement. However, as someone who grew up there, I am hopeful. There are brilliant people and they have good administrators. You were praising the high commissioner. That kind of calibre of individual you find in every district in India because you only get selected through an all-India level examination.
It is a challenge, but we should go there because we will not be invited to the party when they are just opening the champagne bottle. They want us to be there when the things we will do will allow them to open the bottle of champagne.
The Chair: Mr. Jha, we have come to the end of our time. You have displayed your enthusiasm for the topic and your knowledge and all of the areas of our possible relationship between Canada and India have been canvassed through you. We thank you for generating such an enthusiastic discussion.
We look forward to preparing our report, where I hope some of your ideas will be visibly displayed thanks to your presence here. Thank you, Mr. Jha.
(c) 2018. All Rights Reserved.