Yes, that is correct. As I am Irish, they are their costs. I am based in Dublin.
Between 1991 and 2002 the Indian economy grew at a rate of 6% per annum. This may be compared to a growth rate in industrial European countries of 2.5% to 3% in the same period. Between 2003 and 2005 the rate of economic growth in India was 7.5%. During the first quarter of this year it grew by 8%. The Indian Prime Minister stated recently that in the next ten years the Indian economy was likely to grow at a rate of 10% or more, the same rate at which the Chinese economy grew during its expansion phase.
Annual trade is also increasing. India's export figures are growing at the rate of 25% to 30% per annum. Import figures are growing by 35% to 40% per annum. Therefore, India is importing far more than it is exporting and will continue to do so, mainly to meet the demands of the middle class. This presents opportunities to Irish export businesses in every field.
Export figures are growing very strongly and have nearly doubled in the past three years. Foreign exchange figures are also increasing significantly. The total in respect of foreign direct investment was less than $2 billion but now stands at $6 billion per annum. It is hoped this figure will reach $10 billion in 2006. Foreign institutions are investing on Indian stock exchanges, particularly the Bombay Stock Exchange. Last year the figure reached $10 billion to $12 billion. The largest contributors are non-resident Indians. Last year the Indian diaspora invested €26 billion in India.
The level of Irish exports to and imports from India is low. This means, however, it can grow more quickly. There is a large manufacturing base in India which has highly developed banking and financial institutions. Language will not present a problem to Irish businesses. There is also an unlimited supply of labour.
More than 400 of the Fortune 500 companies have put down roots in India. Apart from these 400 Fortune 500 companies the main strength of India is its small and medium-size businesses. There are a couple of million of these small-scale businesses such as Mr. Prakash is representing here. They are looking forward to collaborating with Europe and that is where our opportunities lie. That is the message the Asia Trade Forum is giving to Irish exporters.
The next slide shows the sectors the Asia Trade Forum has identified for business opportunities in India. Engineering, particularly high precision engineering, is at the top of the list. An interesting KPMG report compares China and India in terms of engineering. If one wants a small volume of extremely high precision equipment or engineering products, India can design, develop and build it. However, China is the place to go if one wants something manufactured in bulk quantities, the type of thing which if it does not work one can throw away and buy a new one.
Research and development is an interesting area because of the high level of technical education in India. Everybody knows about the IT industry. The two sectors which are of Irish interest are tourism and food processing. Engineering is a major sector in that India manufactures practically everything. It is planned to put the first Indian rocket on the moon in 2008. All the precision engineering for that project will be done in India. It is a centre of high precision industries for everything.
I represented the Irish Exporters Association at the EU-India business summit held last September. The engineering industry was selected by the EU as the main source of co-operation between India and Europe. High quality industries from Europe and India were represented at the summit.
Research and development is also much cheaper as India is a low cost economy with highly qualified people. Most of the major multinational corporations have put down roots in India for research and development. The 2002 science and technology agreement which the Irish Government ratified and signed in Delhi last January gives Indian researchers access to European databases. This offers a unique opportunity for us. I have case histories for some of the Irish companies involved there.
Over 300,000 English-speaking engineering and IT graduates qualify in India every year. This is practically equal to the combined total of the world output of engineers. Everybody knows about Indian IT industries and the computer sector so I will not go into that in detail. I will leave a copy of the Powerpoint presentation with the members of the committee.
India has the second largest education system in the world. The Government of India decided in its current five-year plan that, irrespective of the growth rate, 4.5% of GDP would be invested in education and half of that would go to primary education. There are over 1 million educational institutions and 600,000 primary schools with 3.2 million teachers. There are also 1,200 industrial research centres and over 5 million scientists and engineers.
The slide relating to programmers' salaries shows that the rate in Ireland is one of the highest at $28,000 compared to India at approximately $6,000. However, we must remember that when I started in my first job in Tallaght in 1977 my salary was way below $5,800, so it is comparable to the standard of living. Salaries here are very high compared to India but the cost of living is cheaper in India. We cannot compete with Indian industry on the basis of wages alone. We need to have something different and, fortunately, we are doing it.
Some 4.5 million tourists travel from India each year and almost 60% of these come to Europe. Various European cities are among the most popular destinations. With an imaginative approach we could get 10% of these tourists to visit Ireland. Like all tourists, Indian tourists are fun loving, high spending people. A popular period to get out of India is in May when the temperatures are around 45° Celsius. There is great potential in that business.
India is also a great country for agriculture. We are the largest producer of milk, tea and a number of other products. Practically all agricultural products, including fruit, are produced there. Unfortunately, a very small proportion of this goes into high valued added products because the post-harvesting facilities are poor. Throughout India, 40% of crops are lost to pest and vermin every year. Natural disasters also have an impact on agricultural production. Due to rising per capita incomes there is a tremendous demand for the value added and processed food products. This will provide one of the best opportunities we can exploit in India for manufacturing with Irish technology in India and also for exports from here.
I have been living in Ireland since 1967. Some committee members may have been in school at that time. I did my PhD in Trinity College Dublin. I am a research scientist working in multinational companies for 26 years. I have been the chairman of the international society of the chemical industry and the institution of occupational safety and health in Ireland.
The last slide relates to how my small Irish company hopes to contribute to reducing Irish greenhouse gas emissions. The first phase of the Kyoto Protocol is already in existence and we will have to pay a penalty of over €1 billion. The projects we are discussing in India can take 50% of those surplus emissions with much lower costs. I will skip the last few slides. I thank the committee. God bless.