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INDIA'S commercial ties with Hong Kong have stepped into overdrive following economic reforms that have helped restore investor confidence and freed the nation from tariff barriers.

  Following a trading boost of 100 per cent between the two economies from 1992 to 1994 in the wake of Prime Minister P. V. Narasimha Rao's economic liberalisation programme, trade was up another 39 per cent in the first quarter of this year and is poised to reach a record US$2.5 billion.

  India's reforms have fuelled economic growth to 5.3 per cent.

  According to Finance Minister Dr Manmohan Singh 'few countries can claim as quick and smooth a recovery from as deep an economic crisis as India's'.

   Foreign currency reserves are up and foreign investment is booming, with Hong Kong money to the fore.

   In 1991-92, capital inflow from abroad amounted to US$150 million. And, by 1993-94, foreign investment had quadrupled to US$620 million.

   Another 50 per cent surge has been recorded in the first half of this financial year.

  Hong Kong's contribution continues unabated.

  Only last month China Light and Power announced it would re-locate an entire 1,520-megawatt oil-fired power station from the territory to Ennore in Tamil Nadu.

   CLP's joint venture, HMG Power, is behind the historic removal of the 15 year-old plant. The project, due for completion in 1998, will cost $5.5 billion.

  Hopewell Holdings tycoon Gordon Wu's plan to build two power plants worth US$12 billion is on track.

   Shangri-La Hotels is exploring several projects, while Holiday Inn has just opened a hotel in the southern hill station of Ooty.

  Grand Hyatt is scheduled to open its second hotel in New Delhi in 1998, complementing the Regency Delhi which opened in 1983.

   Trade delegations and missions between Hong Kong and India are likely to boost economic ties even further.

    Cuts in import and excise duties will also herald more trade.

  From highs of around 300 per cent, import duties have dropped to a maximum of 50 per cent and are still tumbling. Some are down to 10 per cent.

   Hong Kong exports to India have jumped 80 per cent in the first three months of this year as a result.

  However, India still has to grapple with 12 per cent inflation.

  But overall, the Commissioner for India, Kamlesh Kumar, said: 'India is now being looked at by the Hong Kong business community as a destination worth exploring.'   At the end of a high-level trade mission to Bombay and New Delhi in April, Hong Kong Trade Development Council (HKTDC) chairman Victor Fung said: 'Trade and investment between India and East Asia - in particular China - has barely started.

  'Hong Kong is in the perfect position to act as a conduit for what is likely to become one of the world's most significant business relationships. In short, there are immense opportunities for us in India.'   It was the second high-powered delegation he had led to India in the past nine months. The HKTDC is to open two offices there.

  'The time is clearly right to develop a closer trading and investment relationship,' said Frederick Lam, deputy executive director of HKTDC.

  'Once we have offices operating in New Delhi and Bombay, we will be able to be much more pro-active in initiating contacts.'   Dr Fung has identified a three-pronged thrust by Hong Kong business into India.

   The first to be targeted are the infrastructure sectors of power, toll roads, ports and telecommunications.

   Second, Indian exporters will be linked to Hong Kong's formidable global network of sourcing and distribution of consumer products.

   Third, joint venture opportunities for consumer goods will be identified.

           India's Commerce Secretary, Tejendra Khanna, has predicted the consumer goods sector will be liberalised by 1997.

  A key element in the new era of Hong Kong-India economic relationship is the territory's 20,000 traders who account for a tenth of all local exports.

  Dr Fung said: 'We are trying to put together the exporting expertise of Hong Kong and manufacturing know-how we have discovered among Indian manufacturers.'   Entrepreneurs have been equally bullish about prospects.

   Allan Wong, head of computer and electronic games manufacturers Vtech, said: 'There are a lot of things China needs that India can supply - like electronic products and software. The trick is to look at the opportunities rather than the apparent threats.'   Henry Tang, who heads Peninsula Knitters, said: 'I was encouraged by how aggressive Indian business people are. They are eager to do business and are positive in their outlook.'   While India and China remained competitors, Hong Kong had a role to play in the development of both economies.

   'This is exactly where Hong Kong's real value emerges. There are things I think I could sell to India that would come from factories in China,' Mr Tang said.

  'At the same time, there are things I need in my factories in China that I could source in India. This shows clearly how Hong Kong can act as an effective conduit.' 



Plan for wider HK trade role