Please allow me to begin by thanking the organisers of the Indo-Finnish economic seminar for the opportunity to address this illustrious audience representing decision-makers from the administrative and economic sectors in Mumbai and the state of Maharashtra. The large attendance demonstrates a mutual interest in developing trade and economic relations between our countries.

Mumbai's centuries-old status as a gateway for interaction between India and Europe creates an especially auspicious starting point for our conference today. The most direct links between us on the company level quite often run through this city.

Europe has woken up to an awareness of Asia's central importance in the world. The dynamically developing countries of this continent are appearing more and more often in the focal point of both political and economic events. Indeed, the new Asia strategy adopted by the European Union in 1994 takes as its starting point the central importance of Asia in its external relations.

India has traditionally been an important cooperation partner for the European Union. The more active content that this relationship has been given in recent years has been enshrined in a broadly-based strategy covering the period up to the year 2000.

Earlier this year, the Commission of the European Union also issued a communication of its intention to expand the partnership between the EU and India. The goal is to elevate relations and cooperation to a completely new level so as to be able to respond to the challenges posed by India's process of economic reform and opening up.

The Government of Finland has announced its support for the further development of this cooperation and will actively participate in implementation of the programme.

An orientation based on a free market economy and international interaction has led in India to a strengthening of the economy's external situation and has accelerated GDP growth. In order for this dynamic development to continue, there is now a need for implementation of internal reforms in the direction of an open market economy also in sectors like banking and insurance. This is a big challenge for actors in economic life, but especially for the Indian Government, which is committed to continuing a policy of reform.

Mumbai seems ready to contend with the evolving new circumstances. As India's financial and banking centre, its position will be further strengthened as the process of opening up advances. There is every reason for confidence that it will retain and improve its standing also as a centre providing the whole of South Asia with high-quality services in this sector.

Against growing external challenges, India can array her own strengths and competitive advantages. With the future in mind, I would see India's most important asset as probably being in your superb educational system and the enormous number of scientific and technical experts that it produces.

In effective chain of innovation consisting of high-level basic and applied research combined with industrial development functions is today one of the main pillars supporting national competitiveness. In this context, the success that India has already achieved in producing computer software for the global market deserves recognition. It demonstrates an enormous intellectual potential, which creates broad opportunities also for cooperation between our countries.

The second factor that I would regard as essential from the perspective of India's economic development and competitiveness is foreign direct investment. When examined in a macroeconomic context, FDI is often regarded as being complementary to national capital formation and foreign portfolio investment, in other words as a kind of "necessary evil". Experience in some of Asia's rapidly developing economies shows, however, that its effects are much broader and more profound. Foreign direct investment provides an effective and direct channel for transferring technology on an internationally competitive basis.

It is of at least equal importance that direct investment is also often accompanied by the transfer of modern management methods and expert knowledge of world markets, both of which are essential from the perspective of competitiveness. In that light, the Indian Government's efforts to develop the investment atmosphere further in a manner that is clearly predictable must be greeted with satisfaction.

Mumbai and the state of Maharashtra have attracted most of the foreign investment made in India to date. The bulk of the direct investment made by Finnish interests in India has likewise come to this region. I interpret this development as resulting from foreign investors' assessment of where in India the factors facilitating successful industrial operation are strongest. It augurs continued growth in the importance of this region, the heartland on Indian industry.

Despite her small size and paucity of capital, Finland can prove an interesting cooperation partner for an India striving to raise the level of her industrial technology and boost her international competitiveness. Our experience of creating an efficient national chain of innovation could be a foundation for mutually beneficial cooperation between official bodies, research establishments and companies.

The Finnish Government is encouraging companies to push for exports and transfer technology so as to be able to establish themselves in new potential markets. Many Finnish companies have received State aid for their projects in India during the preliminary study and feasibility review stages. Our intention is to continue with this activity and to step it up further, giving special attention to the needs of small- and medium-sized technology companies.

A central theme in discussion of economic policy in India in recent times has related to a slackening of growth and the underlying reasons. I shall exclude from the scope of this examination those arguments that relate to continuing and intensifying the policy of reform. By contrast, one of the biggest factors impeding India's economic growth, inadequate infrastructure, deserves great attention also at this conference.

In fact, as one nowadays so often hears representatives of government and industry in India pointing out, infrastructure always comes first. Without energy there is no industrial production, without telecommunications no efficiently functioning economic life, without adequate harbours and transport capacity, exports and imports become bottlenecks in development. Those are exactly the sectors in which Finnish companies enjoy particular technological strength and in which they can offer products and systems that are both of a high-standard and internationally competitive.

Living as we do in a very severe climate and because our industry is so energy-intensive, we in Finland have had to develop exceptionally efficient power-generation and -transmission systems. Given that we also produce the bulk of our energy from imported fuels, highly efficient use of those fuels and energy savings have always been the focus of special attention on our part.

Owing to the diversified nature of our energy production systems, Finland has expertise and experience spanning the full range from diesel power plants that can be brought rapidly on stream to very large-scale primary energy projects.

Finland is today one of the leading countries in telecommunications-related research as well as in industrial development in this sector. A Finnish company is among the world's biggest and most dynamic industrial actors in this field. Our know-how is especially strong in the rapidly developing mobile phones market. Besides supplying equipment and systems, our companies are also successfully involved as service operators in several countries. In addition to that, many small- and medium-sized Finnish enterprises supply production inputs for the entire telecoms sector.

Our high dependence on foreign trade and difficult transport conditions have made it inescapable for us to develop our technology relating to harbours and cargo handling to a very advanced stage. Indeed, even many Finns are astonished when they are told what significant shares of global markets our companies have managed to capture in this sector.

The forest industry is an economic and industrial segment where India's development needs and Finland's manufacturing and technological know-how match each other very well. As her economy prospers and opens up to the world, India will encounter growing challenges in this sector over the next few years. To ensure a supply of indigenous raw materials, there will be a need for extensive and far-reaching actions to manage India's forest resources efficiently and add to them. Besides that, foreign competition will require the Indian forest products industry to accomplish a strong improvement in its economic and technological capabilities. Furthermore, all of this will have to be done in a manner that protects the environment and its diversity and promotes social development.

As a world leader in forestry and the forest products industry, Finland can be a useful cooperation partner for India in performing this important and broad task. Because our expertise covers the entire forest sector and our experience is global, our cooperation with India can assume many forms. It can extend from comprehensive planning covering the entire forest sector to supplying equipment and complete plants as well as to investing in Indian industry belonging to this sector.

Accompanying me on my visit is a very large delegation of distinguished representatives of Finnish economic life. This is a clear demonstration of the strong interest in the developing Indian market that has been stirring in Finland. In the course of today, the members of the delegation will be making a more detailed presentation of some of the most important industrial clusters in Finland and outlining possibilities for cooperation with Indian companies.

The Finnish Government is prepared to make its contribution to increasing trade and economic cooperation with India. I am convinced that the attitude of the Indian authorities towards this goal is equally positive.

Many thanks!