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Enlarged EU: threat or treat for India?

Rashmee Z AHMED

Thursday 29 April 2004, by AHMED*Rashmee Z.

LONDON: Just 24 hours to go before the European family officially swells to an unprecedented union of 25 member-countries, completing a single market that is 25 per cent of global GDP. And it may be time India wakes up to the perks and perils of the New Giant Europe.

Reaching across 3 time zones to touch borderlands of old Soviet Union, the EU becomes the world’s biggest trading bloc by adding 10 members to the club.

But point about eight ?New Europeans’ - Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia - may be the mint new challenge Europe will offer to cost-competitive, expertise-rich India and China.

Europe’s ecstatic May Day 2004 revolution, bringing the Union to an unprecedented east-west stretch of 3,000 km, finally puts the lid on Communism.

Economists say it starts a new industrial revolution in the exclusive European rich man’s club. It makes history because this will be the only rich man’s club to offer manufacturers, the service sector and R&D investors the low-wage, high-skill, near-sweatshop advantages of the developing world.

Robin Goad, senior analyst at business information firm Datamonitor, says India’s lure as back-office might be affected by the growing visibility of Poland, the Czech Republic and Estonia. New Europeans, like dirt-poor Slovakia, are being dubbed "the Detroit of Europe" as foreign investment swings away from China into towns like Trnava, with low-wage, highly-skilled workers.

R&D investment is flooding high-tech Hungary, with its pool of engineers, scientists and mathematicians.

And Europe’s tech capital of tomorrow could be digitally-advanced Estonia on the Baltic rim, where every school has broadband Internet connection, Web is quite literally a way of life and the telecom industry has the status of a local craft.

T Schmall is director of Slovakia’s Volkswagen factory, which churns out 700 vehicles daily for export, making it one of the top three in the world. He believes the New Europe can beat off the Asian competition.

"If Europe doesn’t do the job, then China will," he says. Analysts say new cost advantage, right within EU’s borders, may be a powerful incentive to off-shore within the northern hemisphere.

To that extent, Europe’s gain may be Asia’s loss.

See online : The Times of India

P.S.

in The Times of India, Thursday, april 29, 2004.

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