India not insulated from global financial crisis: Nath

Prakash Chawla

Paris, Oct 1 (PTI) India cannot remain "insulated" from
the turmoil in global banking and financial system and the
U.S. bail-out would not be sufficient to solve the problems of
the world economy, Commerce and Industry Minister Kamal Nath
said here.

Participating in the India-E.U. Business Summit, which
was also addressed by Prime Minister Manmohan Singh last
evening , Nath said India would want new rules for the world
financial system as the stakes are high not only for the U.S.
and other developed countries but also for the developing
nations.

He said while the short and medium term fundamentals of
the Indian economy were sound, the country "cannot remain
insulated in the long term from such a crisis..The crisis
which we face today, as President Sarkozy said and was
endorsed by Prime Minister Manmohan Singh, has to be addressed
by the global community".

With European banks and mortgage firms also getting
bruised by the troubles in the Wall Street, the contagion is
spreading fast.

"The emerging new financial architecture is not confined
to one country," Nath said at the summit hosted by the French
business chamber M.E.D.E.F. along with its Indian
counterparts, Federation of Indian Chambers of Commerce and
Industry (F.I.C.C.I.) and Confederation of Indian Industry
(C.I.I.).

As a "responsible" member of the global community, India
would want to participate in the restructuring of the bleeding
financial markets, Nath said. He offered India's association
in the endeavour for the banking and financial restructuring
to France and the European Union.

Nath said, "Whenever I went across the world and to the
U.S., I was told about the best practices... I do not know
what the best practices were. In India we follow our own
practices and the next practices," he said.

India, China and the South-Eastern Asian countries have
not only remained largely unaffected directly by the meltdown
in the U.S. but also have been growing in their gross domestic
product at a rapid pace.

Referring to the bilateral relations with Europe, Nath
said though India would have to open more than the E.U., it is
ready for the free trade agreement.

"India will be subjected to more pain, but we are ready,"
he said.

With high duty protection, India will have to make more
sacrifice than the E.U. which,in any case, has a low or even
zero tariff. The F.T.A. negotiations which were expected to be
completed by the end of 2008 earlier, would not be concluded
by the end of 2009. Bureaucratic delays have affected the
speed of the talks. "You need to push Brussels (EU
headquarters)," Nath said.

Industry chamber F.I.C.C.I. has suggested that instead of
90 percent coverage, the F.T.A. should encompass 95 percent of
the goods traded between the two sides. "Only then there
would be real market access gains for Indian exporters in E.U.
which has a low average tariff except for certain items of
export interest to India," F.I.C.C.I. Senior Vice President
Harsh Pati Singhania said.

In his address, C.I.I. past President Dhruv M Sawhney
said the Indian industry was looking forward to increased
participation of French companies in the nuclear energy,
infrastructure and manufacturing.