T.P. Seetharam: “Mauritian rupee resilient compared to other currencies afflicted by the crisis”

The first thing that comes to mind when the Indo-Mauritian relationship is evoked is either the much hyped Double Tax Avoidance Agreement (DTAA) the two countries share or the cultural similitudes that go long back. Relations however, are multi-faceted and are gaining in importance on the economic front. The High Commissioner of India to Mauritius expounds on these bilateral nuances.

BUSINESSMAG. Mauritius and India share a deep bond when it comes to cultural ties and are growing closer through economic partnerships as well. Why should Mauritian businesses look forward to doing business in India?

India is one of the fastest growing economies in the world and has emerged as a key destination for foreign investors in recent years. Economic reforms initiated in 1991 have grown in scope and scale and yielded increasingly productive dividends. The country’s GDP has been growing at an average rate of over 8% for the past five years, despite the global slowdown. India’s economy is amongst the largest in the world on the basis of Purchasing Power Parity. More than 100 Indian companies now have a market capitalisation of over a billion dollars with some of them acquiring a global profile.

It is today one of the most attractive destinations for business and investment opportunities, with a large skilled manpower base, diversified natural resources and strong macroeconomic fundamentals. India’s demographics are very attractive, with approximately 65% of the total population falling in the age group of 15 to 64 years. A comparatively stable government, an open democratic set-up, and a strong and reliable judiciary system, add further advantage to the Indian economy. The country’s strong fundamentals such as a growing middle-class population, cost competitiveness and strong domestic consumption, coupled with its resilience to counter the challenges of the global economic turbulence, have made it a preferred destination for MNCs from across the world, and this has attracted Mauritian investors as well.

BUSINESSMAG.  Exports from India to Mauritius amounted to Rs 37.2 billion in 2012 while exports from Mauritius to India totalled Rs 446 million only. How in your opinion, can Mauritius consolidate its value proposition in order to bridge this trade gap? 

Despite considerable odds, Mauritius has demonstrated to the world that through hard work and enterprise, it is possible to build a successful nation state based on a robust democratic record, social harmony and providing respectable standards of living for its people.

From an economic and commercial perspective, our two governments are constantly in pursuit of a political, legal and social environment that is optimal for business growth, where jobs for youth are created and skills imparted at the right age, thereby ensuring the peace, prosperity and stability of future generations. This is also the key to providing a platform on which the economy can mature and diversify, and as you term it, consolidate its ‘value proposition’. The emphasis laid on technology, SMEs, health and education in your recently-passed Budget for 2013 is noteworthy.

Technology is critical for developing economies. It confers upon societies the wherewithal to surmount, in an equitable manner, problems such as poverty, gender inequality, unemployment, lack of access and information, and corruption to name a few.

Similarly, SMEs will continue to contribute significantly to the growth of the world economy, employing the bulk of the world’s industrial work force and contributing increasingly to innovation and intellectual property. The recent initiative of your government to promote the Ocean economy provides yet another avenue for Mauritius to add a new dimension to its trade and commerce profile.

Mauritius, with its export zones, could attract Indian SMEs engaged in the field of pharmaceuticals, light engineering, consumer goods, textiles, seafood processing, etc. Indian and Mauritian private sector representatives should make use of Mauritius’ Free Trade Agreements with the SADC and COMESA countries and seize the opportunities and fiscal incentives offered by Mauritian export zones in this regard.  It is incumbent upon us to build upon this momentum to strengthen our partnership, especially in the spheres of trade, investment and business. Our economic and commercial relations, while showing a healthy growth trajectory over the past 5-6 years, making India Mauritius’ largest trading partner, need to expand and diversify. Currently, India’s petroleum exports to Mauritius dominate our bilateral trade. This needs to evolve into a more mature and diversified portfolio of trade.

BUSINESSMAG. Why are Mauritian investors so shy to invest in India? Could this be due to the high level of corruption prevailing in India?

There is perhaps a lack of awareness. Mauritian investors also need to be more futuristic in their investments and be more adventurous. Improvements are also needed in terms of visibility from the Indian side. As for corruption, it is not something specific to any country. There are public activists fighting against this scourge in India. We have an independent media which does not hesitate to ask questions, a vibrant parliament and an extremely active opposition as well as an independent judiciary. All these are institutions of Indian democracy that address this issue of corruption.

Many companies from all around the world have invested in India and find it profitable to so owing to India’s 1.2 billion consumer market.

BUSINESSMAG. Recently, four local banks were duped of their investments in India. How can this be explained and prevented in the future?

Because of the attractive investment climate that Mauritius affords, it has emerged as one of the largest sources of investment into India. FDI inflows have touched $70 billion in the last decade. Indian companies have also been enthused by the liberal economic environment of Mauritius and have invested nearly $14 billion in the last five years. These investments are spread across a wide range of sectors from hospitality, and pharmaceuticals to IT, banking, insurance and infrastructure.

While cases such as the one you have mentioned are unfortunate, they are an exception in the otherwise flourishing financial and economic engagement between the two countries. Mauritius and India both have well regulated banking sectors that are alert to such developments and can take the necessary steps to prevent such incidents from repeating. Exercising proper due diligence procedures would help address such concerns.

BUSINESSMAG. The Indian Minister of Commerce Anand Sharma during his visit to Mauritius announced the establishment of a visa upon arrival for Mauritian investors. When can we look forward to this?

This proposal is being actively considered by the Government of India, which is looking to expand the list of countries which are extended visa upon arrival facility on a reciprocal basis. It is hoped that there will be a positive development on this front soon.

BUSINESSMAG. The Indo-Mauritian relationship has been under a lot of scrutiny recently due to the diverging concerns of both parties with regards to the renegotiation of the tax treaty. Where do matters stand presently? Can we anticipate a win-win solution in the near future?

First of all, I am glad negotiations are going well. When I arrived in Mauritius two years ago, negotiations had stopped altogether for some time. I am happy to say that we are back on track.

The resumption of official-level dialogue on the Double Taxation Avoidance Convention (DTAC) and the holding of JWG meetings in August 2012 and April 2013 augur well for the economies of both our countries. The 3-year hiatus in negotiations had given space for misconceptions and misperceptions to arise, and these can now be dealt with through constructive engagement and dialogue.

We need to take a holistic view on this issue, keeping in mind the interests of both countries. I am confident that solutions that are mutually agreeable and mutually beneficial will emerge from the forthcoming discussions on the subject. We are having a serious attempt at finding a win-win situation. It is also good that we are not negotiating through the media. Negotiations have not stopped; suggestions are being communicated constantly between the Joint Working Group parties. We don’t want to have to wait for another six months to progress and this is a healthy sign in the wake of an early solution.

BUSINESSMAG. Where do matters concerning the negotiation of a Comprehensive Economic Cooperation and Partnership Agreement (CECPA) between the two countries? The delays around this give the impression of ‘arm-twisting’ being carried out by India.

The 9^th Session of the India-Mauritius Joint Commission on Economic, Technical and Cultural Cooperation held in January 2004 in New Delhi, had set up a Joint Study Group to work out modalities towards the establishment of a Comprehensive Economic Cooperation Partnership Agreement (CECPA) between India and Mauritius.  At the 10th Session of the India-Mauritius Joint Commission, which was held in Port Louis in December 2007, both sides noted the progress in the on-going negotiations on the CECPA.  The various aspects relating to CECPA will figure in the discussions at the 11^th Session of the India-Mauritius Joint Commission, which is scheduled to take place in New Delhi this year on dates mutually convenient to both sides. 

BUSINESSMAG. One of Mauritius’s key priorities is to assist Asian economies in doing business with Africa. Is India taking full advantage of this strategic offer?

We view our relationship with Mauritius not just through the prism of bilateral engagement but also as our gateway to Africa. Cooperation and partnership with Africa is an integral component of India’s foreign policy and remains a leading priority of the government of India. Elements of our engagement with Africa are postulated, elaborated and developed through the India Africa Forum Summit.

Two such summits have taken place and these have laid the foundation for an overarching institutional umbrella for a sustained multi-dimensional engagement between India and Africa in the 21^st century. At the second Africa-India Forum Summit in Addis Ababa in May 2011, the Prime Minister of India announced a series of measures including a US $ 5 billion line of credit over the next three years for economic cooperation with Africa; an additional US $ 200 million to set up educational and scientific institutions and training programmes; over 22,000 scholarships over the next three years to African students; specific and targeted efforts in capacity building and human resource development especially in agro-processing, textiles, weather forecasting, earth sciences, agriculture and rural development; increased focus on infrastructure development including projects; among others to signal India’s abiding commitment to sustained process of economic cooperation with Africa. 

Mauritius is a member of various preferential arrangements and linkages such as SADC and COMESA which have huge markets of US $ 230 million and 380 million, respectively.  Mauritius also has an investment friendly climate, with the requisite legal and institutional framework towards attracting businesses.  India on its part has embarked on a broad-based and vibrant policy of economic interaction with the African continent.  Naturally, this makes Mauritius a vital platform in India’s business agenda with Africa.

There is no doubt that Mauritius can provide the required base towards directed Indian investment in Africa in a bilateral or triangular framework. However, the Indian diaspora in other African countries which are growing at impressive rates, are also actively attracting Indian investment directly into their countries in various sectors.

Indian businesses will continue to look at Mauritius as a gateway to these sizeable markets and avenues. However, the size, breadth and scope of the Indian economy and the myriad companies that now animate this economy will allow for investments to be made in a geographically diverse manner depending on the specific case and after assessing the various incentives offered to these investments. Needless to say, in a competitive and dynamic environment countries will continually have to evolve policies and mechanisms to try and derive maximum benefit from the changes in the global economic landscape.

BUSINESSMAG. China is also ferociously set out to mark its presence on the global scene and establish ties with Mauritius as well. How is India coping with this competition?

In an era of globalisation and receding trade barriers, the comfort of secure markets and static export profiles is no longer an option. The challenge therefore is to restructure our economies to become more competitive, flexible, and broad-based, in order to meet the emerging global requirements.

The rise of India and China as two of the world’s economic drivers is one of the defining features of the global economic landscape over the past decade. In this context, both countries are looking to broaden their economic and commercial horizons, and a healthy competition between the two economies in the global marketplace is a welcome phenomenon. Mauritius will of course make its own independent choices about its economic and national interests.

BUSINESSMAG. That Mauritius relies heavily on India for imports is an established fact. Has the possibility of signing a Free Trade Agreement been evoked?

At the 10^th Session of the India-Mauritius Joint Commission, the Indian side took note of the request of the Mauritian side with respect to the Preferential Trade Agreement within the context of CECPA discussions. These should come up for further discussions within the auspices of the 11th Session of the India-Mauritius Joint Commission, scheduled  to take place in New Delhi on mutually convenient dates.

BUSINESSMAG. What are your views on the Mauritian economy?

The Mauritian economy is holding up very well compared to the global situation where there is negative growth. It is good to see Mauritius registering healthy positive growth. The Mauritian currency is also holding up well while various other currencies including the Indian rupee have taken a severe beating.  There is great vibrancy in your economy. This is something that we admire and I am confident that as the global economy improves, the Mauritian economy will be growing even faster. Frontiers will be opening up for a two-way traffic through your regional dialogue and more diversification.

BUSINESSMAG. Are you satisfied with the current air connectivity between Mauritius and India?

No, I’m not. I would like to, first of all, see Air India flying back to Mauritius.  Air India had discontinued its flights to Mauritius due to financial troubles. It has recently purchased a large number of Dreamliner aircrafts and is now looking at restarting its previous routes, including Mauritius. I have been urging them as well as the Civil Aviation Industry to restarts flights operated by Indian airlines on the Mauritian destination. I am told that Air India is definitely looking into the option of flying back to Mauritius.

It is important for us to increase our connectivity. Currently, six flights per week are available from Mauritius on the Indian destination. This is not enough. Often, it is very difficult to get a seat. Of course, we would like to see Air Mauritius fly more as well. I believe they already have rights to fly 15 times a week to India. This kind of connectivity is important for better economic interaction.

BUSINESSMAG. India is considered to be relatively self-sufficient with regards to food production. How can Mauritius achieve food security like you?

The answer would be to produce more. Mauritius is already making efforts to diversify its agriculture through the production of potatoes and onions. Similarly, you should be striving for the local production of dairy products. This should be possible through the right policies and participation of investors to develop a dairy industry for your own needs.

Greater diversification is required in the fisheries sector as well. These are areas in which India has considerable experience and is willing to collaboration with Mauritius in.