Financial News

23 September 2013

“The issue of expanding definition of wages can put pressure on Indian companies in Korea, and I sincerely hope this issue is settled soon,” said the Ambassador of India Vishnu Prakash in an interview with Financial News on 16^th, regarding the recent controversy over expanding definition of wages.

Ambassador Vishnu Prakash expressed hope for more participation by Korean companies in the Indian market as he celebrates 2013 as the 40^th anniversary of Korea-India diplomatic relations. He said, “There are a number of business areas including shipping and electronics where we invite more Korean companies for participation.”

Q: It has been 40 years since Korea and India established the diplomatic relations. What are the general perceptions of Indian people on Korea? 

A: This is a very special and important year for both of our countries to mark the 40^th anniversary of bilateral diplomatic relations. We have greatest affection and goodwill for Korea. Korean products have become household names in India. You can find Korean products in the kitchen, bedroom, everywhere in Indian homes. It is truly “Korean invasion” in India and we are very glad about that. We admire what Korea has accomplished in terms of economic growth and Korea is always one of our preferred partners for R&D.

Q. India’s presence in the international society is immense, with vast land and population and military power. What do you think is the underlying strength of India? 

A: Firstly, India has a large population. And two-thirds of the population is under the age of 35. Even though the world is aging, India is getting younger. Also, like Korea, Indian people have passion for education. We add 5 million engineers to the pool every year. We also have strong private sector, which accounts for 85% of our GDP. Companies like Tata Motors have shown solid performance over 150 years of history, and their global footprint is getting bigger.

Q: Some people say India is a country where you can see 19^th Century and 21^st Century at the same time – Do you agree? Please let us know more about the India of 21^st Century, especially about your IT strength. 

A: Well, let me start with our IT strength first. We have 4 million Indian people in the IT industry the size of which is estimated 100 billion dollars. There are four reasons why we are strong at IT: First is English language which we have acquired during the time of the British rule. Second is our ability in Maths, which is almost a part of our DNA. Also, we have very young population who are well educated. 

It is interesting that people say that in India, many centuries co-exist. I would firstly say that India is a very large country. We have the highest of mountains in the world, and the coldest and hottest of regions. We have tribal people who have maintained their natural way of life and their language for a long time. We also have all religions in India – practically every religion in the world, from Hinduism and Buddhism to Islam and Sikhism.

Q: Some say the global turmoil caused by the U.S. quantitative easing will affect the Indian economy. 

A: India has grown on average of 7.9% over the last 10 years. Its economy is two trillion dollar in size and we are the third largest economy in Asia. Like other countries, Indian economy is globalised and affected by external factors from other countries including the U.S, Europe and so on. We are also affected by internal factors, including current account deficit. Last year we had a CAD of 4.8% per GDP, but we are aiming to trim it to 4% this year. We also have a large trade deficit of $ 190 billion, where our energy and oil imports ($ 160 billion) played a big part. However, I must emphasise that Indian economy’s fundamental remains strong. We have managed to reduce debt-to-GDP ratio from around 70% to 60% over the last five years. The government is executing various measures to energize the economy and we are confident to recover our normal growth rate within 2 – 3 years.

Q: Tata Motors and Mahindra & Mahindra have come to Korea several years ago – how are they doing in the Korean market? 

A: Tata bought Jaguar and Land Rover four years ago, and it successfully turned it around from £250 million yearly loss then to current £1 billion gain. If Korea expands the definition of wages, it may affect the financial health of the Indian companies. Tata Motors and M&M can contribute to the Korean economy by creating employment and helping to develop new technologies. Ssangyong Motors will also stop making losses within 1 – 2 years.

Q: Do you think Indian companies may retreat from Korean market if the definition of wages is expanded? 

A: What I can say is that Indian companies are under tremendous pressure. Every market should have predictability and this issue of expanding definition of wages is adding financial pressure on Indian companies. I sincerely hope this issue is settled as soon as possible.

Q: What do you think about the possibility of Korean companies participating in India’s nuclear power projects? 

A: I have been impressed by Korea’s civil nuclear technology and skills. We have ambitious plans to expand nuclear power generation capacity but currently it is required, especially after what happened in Fukushima, to review its security in all aspects. Once we complete the review, we will open bidding and we hope to see Korean companies’ participation as we know Korea’s capability in this field.

Q: You have been here in Korea for a year and nine months – What is your impression on the country so far? 

A: I am impressed by the concept of creative economy. A very brilliant concept, I think, conceived by President Park, who herself has an engineering background, it urges to promote technology, education, youth and SMEs to add new momentum for growth. I think it is an impressive strategy and hope to see its success. I am also very impressed by the Korean sense of humour as well as its “ppali-ppali” culture, which I often fancy to bring to our country.

By Park, Ji Hoon () 

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