ITALIAN PM PRODI LEADS LARGEST EVER TRADE MISSION TO

UNCLAS KOLKATA 000054

SIPDIS

SENSITIVE, DEPT. PASS USTR
SIPDIS

C O R R E C T E D C O P Y (ADDING CAPTION)

E.O. 12958: N/A
TAGS: ECON ETRD EAGR EFIN EIND IT IN
SUBJECT: ITALIAN PM PRODI LEADS LARGEST EVER TRADE MISSION TO
KOLKATA


1. (SBU) Summary. February 11-12, Italian Prime Minister
Romano Prodi visited Kolkata with over 300 business
representatives, Italian Commerce Minister Emma Bonino and other
senior government officials as part of a "global strategy to
open new markets in Asia." The delegation consisted mostly of
Small and Medium Enterprises (SMEs) because, as Commerce
Minister Bonino noted, they constitute almost 90 percent of
Italy's economy. The Italian businesses met with
representatives of over 360 local Indian companies, conducting
more than 2,000 individual meetings. The delegation focused on
agro-business, marketing of products for leather manufacture,
jewelry, furniture and textiles. These businesses were also
backed by senior officials from the Associazione Bancaria
Italiana (ABI),which is providing Euro 2.6 billion in financing
for Italian SME exports and joint ventures, and by
Confindustria, the Association of Italian Industries. In
Prodi's remarks at Calcutta University, where he received an
honorary doctorate in science and at a seminar hosted by the
Federation of Indian Chambers of Commerce and Industry (FICCI),
the Italian PM outlined a broad vision of Italy capitalizing on
being part of the European Union (EU) -- a market larger than
the U. S. -- to develop commerce with India and Asia. Bringing
the largest international business delegation ever to visit
Kolkata, with the key financiers needed to close deals, was a
strong indication of Prodi's apparent seriousness in
implementing his vision of more Indo-Italian trade as part of a
greater EU engagement with Asia. End Summary.




2. (SBU) Italian Commerce Minister Bonino described the
presence of the largest business delegation ever to Kolkata as a
"global strategy to open new markets in Asia." As a result of
its presence in the EU, Italy now sees Europe as a domestic
market and wants to expand to emerging markets in Asia. The
Italian government and businesses, many of them SMEs, see
potential to develop markets especially in India. As Bonino
noted, India's middle class is five times that of Italy's entire
population. Kolkata and East India offer opportunities because
of the number of existing commercial relations, such as in
agro-business, leather, jewelry, furniture and textiles. The
over 300 Italian business people met with representatives of 360
local Indian companies, conducting more than 2,000 individual
business meets. Given the strong commercial potential, the
Italian government was planning to open a new commercial office
in Kolkata by the end of 2007.




3. (U) In the agro-business sector, eight MOUs will be signed
during the delegations visit to India, which includes also
Mumbai and New Delhi. Kolkata was a key destination as West
Bengal is a major agricultural producer, leading in rice
production and vegetables, and also is a major producer in the
fisheries sector. Representatives from the Parma food cluster
shared their experiences to facilitate setting up food clusters
in West Bengal and Italian consultant Octagon will conduct a
market survey of food processing in West Bengal to be completed
by June 2007.




4. (SBU) Bonino noted Italy also wanted to sell equipment for
the leather sector as West Bengal is a major leather producer
and has a great demand for modern leather production equipment.
The recently established 1100-acre Calcutta Leather Complex
(CLC) is a Special Economic Zone (SEZ) for leather and allied
industries. CLC has a total tanning capacity of 1,000 tons
using 30 million liters of water a day. It has a
state-of-the-art central effluent treatment plant. According to
the Directorate-General of Commercial Intelligence and
leather good. Of this, 25 percent is processed in West Bengal.
Kolkata also accounts for 55 percent of India's domestic
production. In addition, the Italian government will assist in
setting up a design and leatherwork training facilities at the
CLC.




5. (U) Jewelry also offers significant opportunities.
According to the Indian Gem and Jewelry Export Promotion
Council, India exported USD 16.8 billion worth of jewelry in

2005. West Bengal exported USD 260 million and of that USD 195
was produced and exported from Manikanchan, established in 2003
as India's first jewelry SEZ. Again, Manikanchan presents
opportunity for Italian companies to export equipment and
expertise, especially in the area of modern jewelry designs and
low-carat jewelry items. Bonino commented that closer
commercial links to the Indian companies would present
opportunities to offshore production for greater efficiencies
and competitiveness for Italian businesses.




6. (U) The Italian businesses will be supported by financing
from the Associanzione Bancaria Italiana (ABI). According to
ABI General Manager Giuseppe Zadra, ABI has arranged Euro 2.6
billion in financial instruments guaranteed by the Italian
national insurance scheme to finance the SME's up to Euro 200
million for business ventures in India. Societ` Italiana per le
Imprese all'Estero (SIMEST),the development finance institution
dedicated to supporting and promoting the activities of Italian
companies abroad, will also provide funds to the SMEs through a
Euro 300 million "Go India Fund." In addition, President of the
Council of Small Industries of Confindustria Guiseppe Morandini
said that his organization would assist the small businesses in
overcoming the government red tape, both Italian and Indian.




7. (SBU) During his remarks on receiving an honorary doctorate
from Calcutta University and at the "Indo-Italian Synergy:
Destination West Bengal" business seminar, Prodi emphasized that
Italy's engagement with India was part of a broader EU context.
While Calcutta University Chancellor and West Bengal Governor
Gopal Krishna Gandhi, grandson of Mahatma Gandhi, spoke grandly
of India's natural affinity for the great history and culture of
Italy, Prodi rather spoke of the rising dominance of the EU.
Prodi noted that with the recent addition of Romania and
Bulgaria to the EU, its population was close to half a billion
-- a far larger market than the U.S. The Euro was also a strong
and increasingly dominant international currency, one which
China and India were now holding in addition to the U.S. dollar.
Prodi also emphasized the EU's commitment to principles of
human rights, tolerance, democracy and peace -- principles
shared with India. Prodi saw Italy as being the bridge for the
EU with Asia. He commented that shipments from Asia could
arrive in Italy within five days, a much shorter period than
required for reaching ports in Northern Europe.


8. (SBU) Comment: While much was made of historic Indo-Italian
amity, with frequent references to Italian travelers like Marco
Polo and Niccolao Manucci, rhetoric aside, the Italian visit to
Kolkata appeared to generate tangible results for some of the
businesses that participated. Bonino and others focused on the
gains for Italy in developing commerce with India, whereas Prodi
spoke more of the EU's potential as a trade partner, possibly
reflecting his past as the President of the European Commission.
EU that would be the most important trading partner for India.
Evident in the tone and direction of Prodi's comments was his
position that the EU was a greater potential market and, with
the increasing importance of the Euro, a more important
financial partner than other potential suitors, such as the
U.S., China or Russia.
JARDINE