Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 6 - Evidence - May 6, 2010
OTTAWA, Thursday, May 6, 2010
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:32 a.m. to study the rise of China, India and Russia in the global economy and the implications for Canadian policy.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, the Standing Senate Committee on Foreign Affairs and International Trade is undertaking a study on the rise of China, India and Russia in the global economy and the implications for Canadian policy.
We have before us Mr. Ashok Dhillon, Chairman and Chief Executive Officer of the Canasia Power Corporation. The company was incorporated to develop, build and own power generating plants in energy deficient markets such as India. The company also has projects in Hungary, Pakistan, Vietnam, Iran and India.
Ashok Dhillon, Chairman and Chief Executive Officer, Canasia Power Corporation: Honourable senators, thank you for inviting me to speak on a timely and important subject, the rise of China, India and Russia in the global economy and implications for Canadian policy. The subject matter is vast and the time, alas, was too short to prepare properly. I apologize in advance for any shortcomings in my presentation.
I shall start with a few general comments and then give a brief overview of our business and project development activities in India's power sector. I shall close with observations about what, in our experience, it takes Canadians to be effective in implementing their plans, in whichever market they choose. Our approach is by no means the only way, but it is certainly the more unusual way to address challenges and opportunities that these markets represent.
After the presentation, I shall be happy to answer any questions you may have on our views, our activities as a Canadian company in the international and Indian markets, the rise of China, India and Russia, and immediate opportunities and long-term threats.
China, India and Russia are the major emerging markets today because they are need driven. They represent unprecedented business opportunities for Canadian businesses, the financial community and Canadian governments. These emerging markets need everything that Canada has an abundance of: a wealthy developed economy, stable financial institutions and, comparatively speaking, good governance.
Unfortunately, Canada has been slow to respond to the changing global economic and political landscape. Other countries have moved faster to avail themselves of emerging opportunities and are now better entrenched. Canada needs to catch up and then move past to gain a meaningful business market share and retain effective global political influence.
With growing economic clout in these economies will come additional military might and global political influence, which could work against Canada. Many other countries have a significantly more focused and coordinating approach amongst government, business, finance and military establishments to address their national interests in the international arena. Canada has a more fragmented and inconsistent approach leaving us ineffective and uncompetitive at times.
Canada's influence on the global stage is waning while China's, India's and Russia's influence are rising. Canada desperately needs to develop a clear vision for itself and reclaim lost territory in economic, political and military influence. It takes strength in all three of these areas to be effective in the global economy.
Canasia is a small private Canadian power developer that set goals to go after big business in India's most difficult sector, power. Although Canada does not manufacture large power plants and does not have the size of companies to take on the equipment, procurement and construction, EPC, of billion dollar plus contracts, Canasia decided to go after that business. The needs of the market that we targeted, the Indian power sector, were so large that taking up modest-sized projects would not gain us any meaningful recognition or foothold in that market.
Canasia stepped boldly into the market because we felt confident that we were as good as the best in the world in power project development regardless of the size of the project, technology or fuel type. Canasia did not have anything to sell that only Canada could provide. Therefore, we exported what this country is known for worldwide, the best of Canadian values: honesty, decency, sense of fair play, professional expertise, toughness and tenacity.
Canasia ignored all conventional wisdom and did not adapt to the Indian system. We took no Indian partners or consultants, paid no one — and to paraphrase the great Canadian songwriter, Paul Anka — we did it our way. Instead of looking south to get big business as most Canadians do, we looked to the east and saw risk, but vast opportunity. We committed and stayed in spite of a decade and a half of trials and endless setbacks. Today, few, if any, small developers can match the size and scope of our portfolio of power projects under development.
Canasia Power Corporation is a private Canadian company that specializes in the development of power projects internationally. We have been in India for 16 years and have had offices in Delhi since March 1993. We are currently developing major power projects in two states: a 2,000 megawatt plant in Uttar Pradesh; and a 2,000 megawatt plant in Gujarat. This totals 4,000 megawatts of thermal clean coal power plants with super-critical technologies.
As of last year, Canasia has undertaken the development of 500 megawatts of solar power. To that end, we received a letter of support from the Government of India's Ministry of New and Renewable Energy.
Our cash investments to date approximate $19 million in development risk capital over 16 years. We are raising an additional $15 million in development funds to bring our total investment to $34 million before the plants go ahead. The total capital investment required to complete the plants will be $7 billion plus.
All of the above projects are being developed in India without indulging in any corrupt practices. We were told it could not be done, but we are doing it as a Canadian company. Indians are the lowest energy consumers in the world. That makes for one of the largest power markets in the world.
By the way, the chart before you applies to all infrastructure needs in India.
Canada and India are a natural fit. India is a democratic country that has a Commonwealth background. Indians speak the English language, among other things. Canada needs major markets, and India certainly has one. In Canada, we are oversupplied by just about everything, and India is seriously deficient in just about everything. We can export expertise, technologies, finance, and goods and services. We have maximized Canadian content and expertise by utilizing some of Canada's best companies in our work there. The list in the chart has many recognizable names. That is part of Canasia's policy.
Canasia's mission is to assist with building India's electrical power infrastructure to develop and build critically needed power generating capacity in India of approximately 4,000 megawatts in base load power plants. Canasia Power Corporation is Canadian and is the developer and the catalyst. We bring development expertise to the projects, design engineering capability, financial structuring and mediating know-how. Our business goal is to build an ethical Canadian owned energy company in India. Over $5 billion in capital investment will go into India because of our work, and potential orders of $5 billion in turnkey EPC orders will possibly go to China. We pull together the best of Canada, India and China.
Canasia is targeting over 500 megawatts of solar energy development in India. To that end, we have received a letter of support from the government Ministry of New and Renewable energy. Because of the support and the potential or market for solar energy, Canasia has decided to set up a 200-megawatts-per-annum solar module manufacturing facility in southern Ontario to ship solar energy systems to India and the Middle East. We believe that Canadian products can compete effectively with Chinese and Indian manufactured products given that it is high in technology and low in labour requirement.
What does it take for any Canadian company to achieve its target of big business in its chosen foreign market? It takes serious commitment in time and financing. It is not sufficient to take a couple of trips to the target market and expect meaningful business results. We need tenacity and staying power. When things do not go according to plan, we do not cut and run. Instead, we stay with the vision and when it still does not happen, we prepare to dig in deeper.
If Canadians do not know the market, they cannot rise above it and, therefore, will be dependent on others and thereby will be compromised. One must know all aspects of the market before entering it, have confidence in bringing value to the market, and know that whatever one brings to the market, other countries can bring also. Where is the value-added? It is necessary to have the ability to mobilize development funds. When Canasia could not get support from Bay Street, we had to right its own offering memoranda and raise its own development money. It was terribly inefficient but ultimately the only way to have staying power, which is critical to ultimate success.
How can Canadians effectively compete and conquer in the emerging global market place? They can do it by getting serious and committed to diverse markets and by not getting complacent when the U.S. returns to normal. From now on, Canadians should think globally as we desperately need to diversify from the one market. This can be done by the Canadian government formulating a consistent policy toward developing international markets and not deviating from it; by forming a united and cohesive front with government agencies, businesses and the financial community; and by working closely together to achieve targeted goals. We do not have this model in Canada, in particular for small companies. By recognizing that we need them much more than they need us, we can provide greater value to capture a meaningful market share.
Canadians need to know that most of the local people in the target market and returning expatriates do not necessarily know their country. It is imperative that Canadian businesses and government officials do their homework and not be too reliant on native partners. In the emerging brave new world with rising new superpowers such as China, India and Russia, Canadians need to be strong, confident, real value providers to protect themselves, and to remember to ask for the business.
The Chair: Mr. Dhillon, for clarification, you indicated that Canada needs to catch up and then move past to gain a meaningful business market share, et cetera. With whom should they catch up?
Mr. Dhillon: We have seen this in India, in particular. Canada, post-Indian independence, was one of the prime countries that India had relations with because Canada helped India to develop. Therefore, Canada had a premier position in the Indian system. Over the last 16 years or so that I have been doing business there, I have seen Canada lose ground to countries that were not there fewer than 20 years ago. For instance, Israel has had no relationship with India for many years but today, Israel is one of the prime movers and shakers in the areas of defence, security, infrastructure building, agriculture expertise, and so on. We have lost ground to United States as well, which was not there until about 15 years ago. We have lost ground to South Korea, Japan and now to China. Today, China is the largest trading partner of India, but a few years ago, China's presence was negligible in the Indian marketplace. We have been losing ground steadily to a number of other countries.
I deal at all levels of government in India, and the consensus I get from the Indian politicians and bureaucrats is that Canada's importance in India is waning dramatically. We are not as important to India as we used to be. They do not see us as being able to bring too much value to the emerging new India.
The Chair: We had influence through the Commonwealth and our British links, but it was India that said, no thank you, to continued development aid from Canada. They said that the bureaucracy of trying to manage it was not cost effective for them, so they simply thanked us very much. Is that not one our problems? They still see us as part of the old Commonwealth and as a development aid agency.
Mr. Dhillon: I do not think that was the true nature of India's rejection of Canada at the time. Behind that statement and attitude was the fact that India did not appreciate Canada's consistent criticism of its development of a nuclear program. Canada's CANDU reactors were in India as nuclear reactors. The Indian government knows that Canada was not happy with its development of nuclear programs. The Indian perspective was that Canadians were hypocritical in having double standards. They thought that because Canada continued to do 80 per cent of its business with the United States, which is the largest nuclear power in the world. The Indian government also viewed Canada doing business with Britain, France, Israel and Russia without criticizing them to the same degree that they criticized India. The Indian government felt that they were being singled out unfairly for criticism, which they resented. As we stand at the back of the line to sign on nuclear agreements, it is a sort of punishment for the years that we criticized them.
With that perspective and to address the issue of aid, the emerging India is gaining confidence and becoming increasingly proud. They do not see themselves as a poor country in need of handouts. They developed an animosity because of Canada's stance. As well, they did not appreciate that Canada was focusing on another kind of development and not on infrastructure and business development by bringing serious technology, serious capital and serious assistance to the things that really mattered to them. Again, they thought that we were misreading them, and therefore they wanted to send a message that they are not a country that requires just aid.
Senator Finley: Thank you for an interesting and, if I may say, blunt assessment of this topic. I was a little surprised by one part of your presentation, and I would like you to expand on it. When you talked about the expatriates, you noted that most of the local people in the target market, returning expatriates, do not necessarily know their country, so it is imperative that Canadian business and government officials do their own homework. This comment runs contrary to a number of prior discussions with witnesses where people have been talking about the diaspora and that we have this huge link with the Indian community and to India itself. Could you expand on that please?
Mr. Dhillon: Yes, our personal view on this matter is that the conventional wisdom is that you go into a new country or a foreign market and you rely on local expertise or local know-how or on the expatriates that are settled in Canada. The problem is that for countries as diverse as India and China, and I am sure Russia falls into the same category, many of the people who settle here have not had the ability or experience to have travelled much in their own country and to get to know all aspects of the country. This is particularly so with India because it is so diverse and so significantly different in different areas. Ethnically, the northwestern Indians are entirely different from the southeastern Indians, and we are not even able to communicate unless we speak in English. We have cultural differences and different ways of thinking. Everything is different.
If we consider what I would imagine to be the larger Indian community here, which is from the Punjab state, the majority of people settled here from Punjab state do not know India at all. They have never travelled to any other parts of India or conducted any business in any other states. The majority of them have never really interacted with any other Indian states and therefore know little to nothing about the country.
Therefore, I sometimes feel that, as Canadians — I have been here since I was 17 years old, so I consider myself more a Canadian than Indian — we are given the wrong advice. For example, when we went into India in early 1993, which is when the Indian government had just opened up its economy to foreign investment, my relatives and friends from school, who had been settled in India all that time, said that if you want to do business here after coming back after all these years, you must know the system, and the system is, for everything you need to do, you need to pay. That was the advice I received from the local community. People out here in Canada, also of Indian background, when they heard I was going to commit seriously to India, said that I had better fill my pockets because of the corruption and bribery requirements. That was wrong advice to a Canadian company.
I am not speaking of doing business in India as an Indian. I am speaking of doing business in India as a Canadian. It was wrong advice because if we go into India as Canadians and do what Indians expect or what our Indian advisers here say, how are we able to stand head and shoulders above anyone else and get noticed? We are just one of the millions coming into India to do business, and it is business as usual. There is no differentiating value to your going in there and doing that and that is what the majority of the advisers in India and out here would say.
As I pointed out, in Canada, for some of the markets that we enter into, we do not really have anything exceptional to offer that other countries do not have, so you have to differentiate yourself. We positioned ourselves in India in the context of what Canada is known for in the rest of the world — as a decent and honest country. We thought that was our value. There is the differentiator. Yes, at the end of the day, the engineering part of it or the product side of it and the marketing and whatever is regular business.
The other read I have is a personal one. I went against the advice of my relatives and friends in India. In a very corrupt country, I know the people are desperate for some honesty. Every day, it is business as usual. They have to pay for movie tickets or a water pipeline to their house or telephone connections, and then they have to pay every month to keep them connected. In that kind of environment, they are desperate for honesty, for someone that they can rely on and for who says something they will do something and there are no other strings attached.
That was what made us gain the foothold. That was what made a Canadian company like ours go out there and secure projects of sizes that large utilities could not secure from foreign countries. We differentiated ourselves. We told the government officials and the bureaucrats, "Not only are we not going to pay, and you can do whatever you want on that score, but we are going to fight to stay here and build infrastructure that you desperately require because that is the right thing to do."
People ask me, Indians and other Canadians, how the heck a small company secures such large deals. It was by being different, taking a different approach and bringing something to India that it desperately needs — honesty.
Senator Finley: That is a remarkably refreshing and, if I may say, brave approach to have taken, and I am pleased to hear that it succeeded.
We had the Minister of Road Transport and Highways here, Minister Nath, and we got the impression that the public sector in India was looking at things in a very non-political, long-term viewpoint, with big, bold goals. Is that the impression you have of the Indian public sector, or are they perhaps more shortsighted?
Mr. Dhillon: The current government is probably, in a few decades time, one of the better governments that India has been accidentally blessed with. The communist party was devastated, and then by some miracle they came into power. The great thing about them coming into power has been that, by and large, in a very corrupt system, they have a few internal people who are very honest and that the Indians acknowledge as honest, and the Prime Minister Manmohan Singh is one of them. The public sector, as has been alluded to, is by and large quite corrupt, but under this government it is turning slowly towards a more honest and open and transparent way of doing business. It is not there by a long shot, but it is definitely turning.
The significance of that is that, as a businessman, when I go in there, if I can read the sentiment at central government level, at the highest level, and it gives me additional confidence to press down harder on the lower levels of government. That is the significance. It is not that the system has changed, but you use the sentiment at the central level as a lever to try to change the ones that are working the files, so to speak.
When we turned to solar energy, the first thing we did was go to the Ministry of Renewable Energy and say that we wanted to do significant solar energy development now that the Indian government has come out with a national solar policy. We wanted a letter of support for 500 megawatts of solar power energy systems throughout India. What is the significance of that letter? The central government creates a national policy and the policy is implemented at the state level, but the state is dependent on the centre for money to implement that policy. When I walk into a state government official's offices bearing a letter from the central government, I am in a better position to press on them to do the right thing.
The public sector is turning to a more transparent way, but I would not say it is there yet. Certainly, any Canadian business and government officials that want to address that issue in India have the moral high ground when they go in there and say that the government wants to do this, and it is what we want to do. It has become useful in that way.
Senator Smith: Similar to Senator Finley, I welcome your reference to honesty and decency. You have used, "in a very corrupt system," which I did not see in the text.
We heard from a witness yesterday that where you have these regulatory empires, sometimes down the ladder a bit to get the approvals you need, they will squeeze you a bit. We also heard that you get the messages from the ministers, but that pressure is further down the ladder.
There were also references to the fact that was the old way of doing business. We were told that it might be to do with the technological high science nature of your particular business. It may be, in terms of the high-tech period and the new global world with all the high-tech stuff, that sort of thing was not happening in that world where you have to be globally competitive as to the old way.
I believe you said that it has not changed, but I get the impression you are saying it is in the process of changing, and we would all take comfort from that. Am I reading this right?
Mr. Dhillon: I can elaborate. When I went into India in 1993, I had not done business in India. I had done high school there, and my parents came here, so I had no choice but to come with them to Canada. When I went back to do business in 1993, I did not know the Indian system well except what I had known from family background. There was no talk of transparency at any level in government in India in 1993. The Indian government was being rocked by scandals at that time.
As a Canadian, I took a personal decision that regardless of the system, the system is so large that there has to be room to operate as a Canadian company that, as I said, would bring a different value system to the system and there has be someone who will appreciate that.
When at that time there was no talk of transparency, no talk of honest governments, we took the stance anyway, and to exacerbate the problem, we went into a state that my family and friends in India thought I was absolutely insane to go into, which is the state of Uttar Pradesh. The states of Bihar and Uttar Pradesh were considered the most corrupt and most dysfunctional of all states in India, especially Bihar. When I decided to go after a project that was in the state of Uttar Pradesh, people thought I had lost my mind. One, I was not going to play by their rules, and, two, I was going into one of the worst states to work in.
We decided to go after this particular project because it made sense power-wise. The fundamentals of the site were incredible, and we could generate and wield significant power from that site to Delhi and to Agra. The site is close to both those cities, but the site was in Uttar Pradesh.
I ignored the advice of my friends and I opened my office. I took my best friend out of school to run my office. He said that it would be impossible to do business the Canadian way. He said I might as well hog tie him and shoot him because we would be totally ineffective. I told him: Just try, and, by the way, you cannot do anything else. If you do not get anywhere, call me.
You know, when I tried and when we tried, there were some obstacles. There were many bureaucrats who said there is no way we could get anything from them if we did not pay. However, the chief minister of the state rallied for us. He saw a different kind of company coming in with a different kind of attitude and different kind of value proposition. The state had offered three units of 250 megawatts for a total of 750 megawatts for the power project. I looked at the request for proposal, and I came back to Vancouver and said to SNC-Lavalin, the thermal people, that they were asking for that because that is what they are capable of doing within India. That is all the manufacturing capability in India. We can source the globe for any size and technology, so optimize this particular proposal, so that when I go to make the proposal, all my competitors will be answering to the 750 megawatts, and we will answer differently. We came back with a proposal for 800 megawatts for the same land, same holes, same water — same everything. That caught the attention of the chief minister. He asked why a company was proposing something different from what the government was asking for, and that company was giving us more than anyone else.
The point is that when we took that decision to go a different way, it caught someone's attention. The entire bureaucracy was incredibly corrupt and dysfunctional, but we caught the attention of the chief minister. Once we caught his attention, he mandated his bureaucracy that things be done along this file. That did not automatically translate into easy street. Bureaucrats are incredibly efficient at befuddling the politicians, and we had to fight our way through the system. The "Yes Minister" thing is quite true in India.
We had to fight through the system. We went to the top, got the sanction, as we were doing with the solar thing, and then rolled up our sleeves and went right down the bottom, to the guys that moved the file, to the guys that moved the files of the guys that moved the files. In other words, from the gatekeepers, from the personal secretary to the bureaucrats to the secretary of energy, we went and started to make relationships.
I have 350 shareholders in my company, even though it is a private company, and two thirds of them are Indian. Many of them said you cannot do this if you are going to do it that way, but we are putting our money in anyway, so let us see what you can do. When I came back with orders and success, people here in Canada of Indian background asked how we did this. I said it was because we tried. You people go there and you put money in your pocket first before anyone in India is even ready to ask, so you have already lost the battle. As Canadians, we can bring tremendous value, expertise and experience. If you are going to go there and do it our way, somebody notices. It does not matter if it is Russia or China; someone will notice.
Here is an example of how it does not work. In Vancouver, I have close personal Chinese friends from Hong Kong. When China opened up, they insisted I come with them and develop power plants in China because China's power markets are the same. I thought the risk in India, being a democratic country, having some rule of law, was somewhat manageable, but in China, with an authoritarian government in place, with no rule of law, I thought the risk was not manageable. I could not outright reject my Chinese friends because that would be a loss of face for them. Very diplomatically, I said: Here is a list of what I need. Why do you not go get that, and if you get that, then I will come. They disappeared into China for two years, came back, and they could not get anything done whatsoever.
It is a question of understanding the system. We made that call that India in spite of its corruption and dysfunctional systems, there are those elements of democracy, and element of British common law as well as the infrastructure and institutions that are in place. They may not work well, but they are there. It is up to us to make them work for us. Taking that decision is what makes the difference. In China, we felt that we could not do it.
Senator Smith: The committee has visited Russia and China. We have not yet gone to India, although most of us hope we will. I have been there myself a number of times.
Corruption was discussed a lot in Russia; it was almost verboten in China. However, your candour and honesty is welcome. You do business in several other countries too. Where is India on the scale of the various countries you deal with?
Mr. Dhillon: India is the prime target market in our view. It should be one of the prime target markets for Canada. India has much to offer for Canadians. It could, if managed properly, not entirely displace the United States, but could take a large chunk of our business and could be very profitable for Canada.
Senator Stollery: My experience is that in places that are corrupt, bureaucrats and other people often are paid, so they take money from whatever they do. You basically subsidize them because they do not get paid.
Are salaries increasing in the Indian bureaucracy?
Mr. Dhillon: You are absolutely correct. The justification for bribery and corruption is expressed as people do not have enough money to feed their children and that kind of thing.
Indian salaries are starting to increase as prosperity starts to be realized. Obviously, we cannot change the entire system all at once. Our answer to corruption is that we are not telling people to change their behaviours for anyone else if bribery is what they have to do. However, they must change their behaviour with us. We are Canadian. We simply say, "Sorry, we are Canadians. We cannot do this. We are decent guys. We are nice people. We will take you for dinner or something, but we cannot do that." Most of the time, they capitulate. There are other times when some high-level bureaucrat who has the power to kill your file says, "Absolutely not. Do you think you are someone special?" We then try to go around him through those he may have graduated with — that again comes back to relationships — or we wait him out. Bureaucrats are constantly being transferred in the Indian bureaucracy, particularly if there is a political change in the state or if a different party comes in at the central level. In the majority of cases, we try to find relationships to get around the bureaucrat.
[Translation]
Senator Fortin-Duplessis: Mr. Dhillon, thank you very much for your encouraging presentation and for having informed us about the means you took to engage in business in India.
A few weeks ago, historian Ramachandra Guha was in Ottawa for a speaking engagement at the International Development Research Centre. During his lecture, he denounced India's ambition to become a superpower. Furthermore, he mentioned the extremist threat that Maoist guerilla insurgency represents to the country's eastern tribal regions and the fundamental questions of shared development that this raises. He spoke of the insidious role of Hindu chauvinism, the growing divide between the rich and the poor, the decline of the state as driver of social progress, the wanton destruction of the environment, and the withdrawal of the media. For all these reasons, according to Mr. Guha, India will not become a superpower despite its staggering economic growth and the expansionism of its middle class.
Do you share Mr. Guha's concerns?
[English]
Mr. Dhillon: Senator, I do not share that view in the manner he puts it forth. India has tremendous problems in all the areas he mentioned. I agree that, perhaps, India will not be the kind of superpower that the United States is, that Russia was at one time, or that China may become in the future. India will become an economic superpower by the sheer size of its population base and its growing economy.
We can surrender to the size and difficulties that India faces or Canadians can take it as opportunity. As I said, we are oversupplied with many good things, and we can assist India to achieve those good things. For example, governance addresses corruption.
In regard to the insurgency movements, Canada does not have to go to war on behalf of India, but we can provide security advice about how to deal with the situation. There are two reasons for insurgency in the Indian case, poverty and the lack of government awareness to alleviate poverty in those regions. Those conditions allow people to sow the seeds of discontent. As Canadians, we can help to alleviate their poverty. We can assist to make the Indian government move a little faster.
Indians and the India government are incredibly sensitive. The minute we say that we can help them move faster, they are suspicious. We can frame it diplomatically; Canadians are supposed to be good at that. At the end of the day, India needs Canada's assistance in all the various areas that the gentleman identified.
I do not agree that those problems will stop India from becoming some sort of a superpower. The problems can be used as opportunities by Canadians to assist India, with whom we have a great deal in common. This is why India is fertile ground for Canadians to do business.
[Translation]
Senator Fortin-Duplessis: My next question concerns a different subject. The province of Quebec, where I am from, is developing wind power increasingly. I know that you are building all kinds of power plants and that you have excellent power projects. Do you think that this is also a viable solution?
[English]
Mr. Dhillon: Power projects are unique to their site. As a blanket statement, yes, there is a role for wind energy in Canada's energy mix, but it will not solve all our problems, it will not solve all problems in all parts of Quebec or in the other provinces. To be economically viable, wind projects require sites with significant amounts of reliable wind, just as solar projects need sunny sites. Our company tries not to differentiate between the project types; we try to differentiate between the requirements and the existing problems to best overcome those problems.
For instance, I have been asked about going into India and developing large coal-fired stations. India is deficient in electricity as are other emerging economies. Canadians are the highest energy users in the world and Indians are among the lowest energy users. India is so deficient in energy that it needs 200,000 megawatts of power today in addition to what the country already generates. To give an idea of what that means, Canada generates a total of 120,000 megawatts of power. India needs to double the entire Canadian energy capacity to meets its current demand. As a Canadian developer, I think that India will develop power from any and all sources, including coal. How can I, as a Canadian, improve that situation? India will build coal plants anyway. Canasia was one of the first private companies in India to turn from conventional boilers to super critical boilers. If they are to use coal, then they should build the next generation of environmentally friendly coal plants. India became the fourth largest in the world in wind energy development, which far supersedes what we have done in Canada. There is a place for wind energy but it will be site specific and problem specific to either Canada or India.
Senator Jaffer: Mr. Dhillon, it has been refreshing to hear from you. I appreciate how well you set out the diversity of India. You pointed out that our Indian population is primarily from one part of India and people generally, are unaware of the great diversity of the people of India. I do not remember anyone giving this committee such an interesting explanation. It has certainly helped us.
You talked about building a long-term relationship. Although we had a good relationship with India after their independence, in the period since, there has been a chill. You addressed the building of relationships to a certain extent. Our purpose here is to listen to people, do our report and recommend to our government what we think we should be doing in India. How do we start building those long-term relationships?
Mr. Dhillon: As I mentioned, the topic is vast and could take days to discuss. Canada had a terrific lead position in India because of all the things we are quite aware of in the historical context. Today, as India engages the world it is aware that Canada is not the only country on its doorstep.
My take on things has always been a bit different. I do not think we should go as supplicants to India just because India is the growing economy and we need markets. That is the wrong attitude to take. In particular in Asia and Russia, and universally to some degree, people admire strength. Unfortunately, Canada, to a degree, has been coming across as a bit of a weak nation. As Canadians going into India, we need to go with an attitude of strength, although we might not have the position of strength. Our company is a prime example because we were not SNC-Lavalin that could tackle a project of 2,000 megawatts. In fact, SNC-Lavalin would not tackle it in India either because it was considered too high risk. We did not have the resources but we went with an attitude. To reclaim territory on the economic and political influence fronts, the Canadian government must go in with an attitude of strength while being culturally sensitive toward India. We need to build a relationship by being proactive with more than just ministerial visits.
Canada has an incredibly low profile across India, although once in a while, ministers will visit. Countries like Zimbabwe get more political mileage when their president visits India than when our prime minister visits. I find that discouraging. We need to make a bigger splash and engage India at all levels. I might turn down the offer of payment from the secretary of energy but I give my house staff in Delhi an extra raise so that they are proud to say to the other servants in the neighbourhood that they work for a Canadian company.
We need to engage at all levels. We need to engage dramatically and in a focused way. We cannot sit here and look longingly at India as a market that would be nice to have. We need a focused, committed government policy that will push business to progress. We must also have the financial community behind business, which is another Canadian weakness. Our financial community is nowhere in sight in the international markets. Engaging and building relationships is paramount and absolutely critical. The Canadian government and all Canadian representatives must engage India at all levels at all times. We have to raise our profile or we will continue to lose ground.
Senator Jaffer: Canada is standing in line. What should we do, apart from what you have already talked about, to get ahead in that line?
Mr. Dhillon: I smile because on September 6, I visited the Minister of Finance, Jim Flaherty. I had just returned from India, where I signed another very large project in Gujarat. We signed on because the Gujarat government had invited this Canadian company to do development. Even though the who's who of the international community is in Gujarat, they asked for us. Initially I refused because I do not have the resources to take on another project. They insisted that we come and when asked why they wanted us to come, they said it was because of our honesty and integrity and because we are the only company and project in India that is clean. They wanted our kind of company.
I returned to Canada and thought that the Minister of Finance should hear about it. I said that our method of doing business in India is working to some degree. We were invited by the premier state to develop a project. I told the finance minister that the Prime Minister of India announced not long ago that India needs $500 billion to build its infrastructure immediately. Keep in mind that India's sovereign risk is practically nil and that the Indian government has never defaulted on international debt to date. The risk profile is very low.
I pointed out that we have dormant pools of capital sitting in our pension funds barely able to break even. If you want Canada to get back up in front of the line — and forget all the arguments as to why we are at the back of their line — pick up the phone, talk to the prime minister or your counterpart, and say that Canada will take up $50 billion. We would take 10 per cent of that first requirement you have of $500 billion. Eventually they will need $2 trillion. I said $50 billion coming from Canada on a sovereign basis — a government to government deal, with zero risk — our pension funds can advance that money.
The gesture will be appreciated two ways. One, of course, is significant money coming from Canada; that always catches everyone's attention. The second thing would be that in advancing an offer like that, the Indian government will appreciate the fact that Canadians are now seriously willing to engage and are putting money on the table.
Why does our company get the attention? We put our money on the table. When some bureaucrat in India is giving me a hard time, as they sometimes do — you foreigners come here, you just want to make money off us because now we are going somewhere, and where were you before? I say, listen, before you go down that path, know that I have put my personal millions and my family's millions and my shareholders' from Canada's millions in India. How much money have you put into the system? I know how much money you have taken out. That kind of nullifies that type of response.
You have to come in bold. You have to come in sensitive; but you have to come in with meaningful action so that they will then recognize that Canada is serious about engagement. That leapfrogs you over the relationship time frame which, as you so correctly said, can take a long time.
The other thing I found is candour. Indians are very sensitive, but if said in the right way, they appreciate candour. When I say to the secretary of energy or any other bureaucrat, listen, do not beat up on me; I am a little guy from Canada trying to do something good, there is an immediate connection. They start laughing and say, all right, all right, because no one from foreign companies looking for the kind of work we are looking for speaks like that. Why are you beating up on us? We are just little guys from Canada. We are decent people; give us a break.
If Canada comes to India and says we need your market; we have a lot to offer and we are ready to engage seriously and they see you being serious, ask for the business. We forget to ask. We go there but we do not say, we want that; and be specific in what you want — that is the homework part. I want that. Give it to me. Most times they do. That shortens the relationship time.
Senator Di Nino: Mr. Dhillon, it is good to see you again. I, too, would like to applaud you for your candour. You have been very forthcoming and I think you have given us much food for thought.
You suggested that you think it is best when you go to India to do business on your own rather than to do joint ventures and partnerships. Is that correct?
Mr. Dhillon: That is right.
Senator Di Nino: You do not believe that having the expertise and assistance that an Indian company would have would be helpful?
Mr. Dhillon: They do not have any more expertise than we do on the business expertise side. What generally is alluded to as expertise is working the system. It is assumed they can work the system so we know them.
In common business principles, Canadians are as good as anyone is so we do not really need their expertise. What a Canadian or any foreign company coming into India looks for is someone who can work the system so we do not have to, so we do not get bogged down — someone to clear the way.
However, as I said, our experience has been — and it was instinct rather than anything else — that if we were to directly interact with the government and take our case directly to the government, whether at the highest level or the lowest clerk level, and state directly to the person that we are having a problem, why are we having this problem, give us a break, we do not need Indian expertise.
I am doing large deals, so the suggestion is I take on Tata Power. In fact, our Canadian embassy in Delhi many times has said why do you not take on Tata Power or a Birla; projects of this size will not get done by a small Canadian company. I disagree.
Tata Power, Birla and the other large companies will be devastating on my efforts in India because they are so large and powerful. First, they will take over the projects; then they will do it their way, which will contaminate the entire process of building relationships, the image and the brand that we have undertaken. Also, it is not true we cannot do what Tata Power or the other companies can do.
We went to the five biggest banks in Mumbai and we interviewed the capital markets group of State Bank India, ICICI, and so forth — the biggest five financial institutions that syndicate today the multi-billion dollar deals done in India. We said to them, we are Canadian and we are doing this work ourselves. These will be Canadian-sponsored projects. Will you be able to bring money to them — and we are talking $5 billion? Unanimously, they said absolutely, of course. Bring the projects to a certain level where project funds are required. We cannot only bring debt; we can bring all the equity you need. I just went and asked. We need to do that.
Senator Di Nino: On Canada's resources, either here or in India, do we have sufficient human financial resources to assist you and other companies?
Mr. Dhillon: There are two parts to my answer. We do not have enough resources on the ground, considering the size of the market and the prize that Canadians should go after. From that perspective, we do not have enough resources. We have enough resources for visiting them and keeping some sort of diplomatic ties, but not for big business.
The second part is that I do not need business there. I need business back here. When I come back with big orders, I have no manufacturing companies that I can go to. At one time, Babcock & Wilcox, in Canada, made some of the best boilers in the world. They are gone; we no longer manufacture anything here in Canada.
I said to Minister Flaherty, even our biggest engineering company, SNC-Lavalin does not have the capacity to take on a $2 billion EPC contract. When I come back with these orders, I have no Canadians to give them to.
We need institutions built up here. We need new models built up to be able to grab that business and effectively implement. The help is needed here, not over there.
Senator Di Nino: You, as well as many other people, have talked about the Canada brand. It seems to me you are defining the Canada brand as values — honesty, integrity, fairness. Is this what you think should be our brand?
Mr. Dhillon: Yes, and expertise. I have been in the international arena a long time. I have been an entrepreneur in Canada all my life. I have absolutely no doubt we Canadians can match anyone anywhere about anything. I have absolutely no doubt about that; I have seen it happen.
The only thing is we are a little reticent, a little shy on taking centre stage over there and saying we can do it. We are also risk shy; that is another aspect of it we need to change. We need to be able to take bolder action, bolder risk, but we do not lack in expertise.
One thing that comes behind my Canada brand is I say to Indian government officials, match me to anyone in India for development expertise. I cleared the first 800-megawatt project I took on in Uttar Pradesh in two years, which is unprecedented in the Indian environment. Even the Birla Group, who started one year earlier and had a smaller 576-megawatt project, we beat them to signing the power agreement. Canasia was the first company that the Uttar Pradesh government ever signed a power agreement with, the first company that the state government guarantee was issued for. Birla had started a year before. We beat Birla.
I did not go into India with any kind of view of beating Birla at anything; I would not be that presumptuous. Our attitude beat Birla. When I asked the bureaucrats why we were signed up, they responded that we treat them decently. They said that those people are paid but they always get the stick on us. If we, as bureaucrats, are not comfortable with what they are proposing, they threaten to go to the chief minister or the power secretary all the time. You guys do not do that, you sit down and work through the problem. Expertise is a critical part of what we export.
Senator Di Nino: You talked about your own business, the development of power, and you talked a little about the infrastructure requirements in India, which I agree are tremendous. I may just add that in the comment that was made a couple times, India truly is the original multicultural nation. We pride ourselves — and we should — on the multicultural nature of our country, but India was far ahead of us in that regard.
In your opinion, what other areas of Canadian expertise and knowledge are there where we should be as aggressive and up front, as you described? I refer to the agricultural sector et cetera.
Mr. Dhillon: There are two critical areas where India needs significant help and Canadians can provide it. The first is good governance. We may complain as citizens that we do not have the best governance, but we certainly do have one of the best in the world, in my opinion.
Without good governance, as the senator mentioned, India will be hampered in its ambition to become a superpower. Without good governance nothing really works well enough, so on a senatorial to senior politician level, certainly nudging them in the right direction would be very helpful.
On an institutional level, our bureaucrats work very well and are very efficient. I was on Premier McGuinty's clean technology trip to India in December. The Ontario bureaucrats who organized that mission did an absolutely amazing job and worked with their counterparts in India. The mission went flawlessly. I was stunned because I know that India can mess up the best laid plans on any given day. For the mission to have gone so smoothly, it was wonderful to see a good, effective, expert group of people doing the right thing in India.
The second area that India desperately needs our help in is education. India is known as the country that exports very well-educated people. Yes, the numbers in India are so large that even the 2 per cent of us who come with a decent education seems like a lot. However, we then forget to look at the literally hundreds of millions of people who do not have access to any school systems. Even in the public school system, where there is free education, the education level and quality is so poor that it is meaningless.
Canada can take a lead role in educating Indians. Educating Indians will not only alleviate their poverty levels but will, in the long-term relationship, it will foster a new generation of Indians helped by Canadians. Guess who they will do business with when they grow up? Canada. Canada was there to help them when the Indian government could not.
We can do business, but two critical areas where Canada can take a lead role are nudging the Indian government at all levels towards good governance — training their bureaucrats and officials. They are hungry for it and will be very receptive. On the mass education side, India desperately needs education.
Senator Housakos: Mr. Dhillon, thank you for your presentation and your candour this morning. I compliment you on your vision and entrepreneurial spirit. Canadians are known as world leaders in trade because of the type of vision and entrepreneurial spirit you have displayed.
I also heard your candid approach to India and your success based on a philosophy of honesty and integrity, which are fundamentally important. I would also like to point out that I see the list of Canadian partners that you have and they are the best of the best in terms of what they do and are recognized all over the world in terms of expertise and technology. I suspect, along with honesty and integrity, that capacity to do the job better than anyone else is probably why you are leading the way. Beyond honesty and technology, is there any other benefit that you bring to the table in India that differentiates you from the others?
Mr. Dhillon: Yes Senator, we bring creativity. As an example, when our government put out a request for a proposal for three units of 250 megawatts totalling 750 megawatts, I did not ask the government if I could respond with 800 megawatts, two units of 400 megawatts, and not the three units of 250 megawatts that they asked for. I came back and told SNC-Lavalin to optimize this thing and make it the best. I asked them to make it better with the same amount of resources. It was a bit of creativity so that when the 22 bidders up against us — international and Indian — ours was the only proposal that came in that was not exactly what they wanted but gave them more without costing more. Creativity is a central part of what we do.
Senator Housakos: You also mentioned that we are losing traction compared to China, the U.S. and even Israel and Korea. Why is that?
Mr. Dhillon: They have been more serious. They have engaged India in a very significant way, while we got hung up on a couple issues that I have already mentioned. They ignored that part of the issue and they went into India strictly to gain market share. They were focused, they knew what they wanted and they were not going to tangle with all the various issues that they could have.
They knew that India, by and large, was not a bad country. It was a democratic country; it had some of the best attributes that a country can have, as Senator Di Nino said. It is one of the most multicultural, diverse, tolerant countries in the world, and has been historically. We have absorbed Tibetans and Bangladeshis and anyone else who has come to our borders. India has opened it borders and accepted millions of refugees from elsewhere. It is a true example of tolerance.
Having all those wonderful, positive attributes, apart from all its negative ones, other countries focused on business. How do we get the most out of the current India?
Unfortunately, in my opinion — and this is a personal opinion and may be wrong — Canada did not focus and did not determine what we want from there and how to get it.
Senator Housakos: When dealing with power generation or infrastructure projects of that nature in the developing world — and you talked about a $5 billion project — $5 billion by Canadian standards and what we do internally in this country is an enormous project. I know for companies like SNC-Lavalin and RSW, over the last couple of years, their biggest problem is a lack of human resources. It is not so much a willingness sometimes to be more aggressive in these developing markets or even a lack of financial capacity — because there are ways to finance deals on the international level — but a complaint is the lack of human resources to tackle some of these multi-billion dollar projects. Is that an issue?
Mr. Dhillon: No, we are so small that when SNC-Lavalin says they have a lack of resources in any sphere, it is a laughable statement.
One time Klaus Triendl, who used to head SNC-Lavalin India, was in my boardroom in Vancouver. He turned to me and told me that I had just gone there and did not really know anything about India. He told me that SNC-Lavalin has been there for 30 years and knows everything about India. He said that we were a little upstart from Canada thinking we can do anything, but that we were not going to be able to do anything. First, it was an uncalled-for sentiment because he was sitting in my boardroom and I had not even called him.
Second, I said to Klaus that at one time SNC-Lavalin was not what it is today. SNC-Lavalin had once been me: One person with a vision to build an engineering company or whatever, however SNC-Lavalin came about. It was that guy who would have understood what I am doing today. As you become big you become bureaucratic and risk averse. You look for excuses not to do things rather than the opportunity to do them. Our attitude vis-à-vis SNC-Lavalin is different. SNC has all the resources in the world. In fact, yesterday I had a conversation with someone about why Canadian companies go to a certain level and then sell out. Except for a few exceptions, like RIM, why do we as Canadians not go out to conquer the world? The owner of the second largest engineering company, instead of doing acquisitions, is negotiating to sell out. Instead of buying, he is selling. We have had a bit of history of selling out and not having the fire in the belly to conquer. SNC-Lavalin is a great company. I sometimes feel a bit sad that they are not taking on more and doing more.
This question of not enough resources continually rings in my ears. The EDC people have said to me that $2 billion deals are too big. Have you thought about taking it to the Americans? What? I as a Canadian go out there, snag a $2 billion deal, and EDC wants me to take it to the Americans? There is something wrong with this picture. We do not have the boldness to our companies as world dominating companies. Thirty years ago, South Korea was a rice paddy field. Today, they are one of the economic giants. Are we smaller than South Korea? I said to the EDC representative in the West, "You think we are not big enough to take on the world." Sweden is not big enough? Volvo makes every truck in Brazil. The greatest concentration of German industry in the world is not in Germany but in Sao Paulo. If the Germans can do that, why can Canadians not do that? It is not a lack of resources; it is our attitude. We need to change our attitude.
Senator Robichaud: You mentioned that India will need a lot of power. India will have to develop ways of producing it, and you mentioned solar power. At the meeting of the Standing Senate Committee on Agriculture and Forestry this morning, a representative from the wood pellet industry said they have a lot of capacity. They have overcapacity and are now exporting to Europe, where they are replacing coal in some of those generating facilities with wood pellets because it is more environmentally friendly. Is there a market in India for this kind of technology or product?
Mr. Dhillon: Senator, there is a market in India for everything. I am not being facetious. Their requirement is so large that anything we can get to the borders of India is useful. Unfortunately, one of the obstacles to Canada doing major business with India is sheer distance. We have to transport ourselves on 24-hour flights, which is not easy on a regular basis. If we are doing services, we have to transport ourselves over there. If we are doing goods, whether it is wood pellets or anything else, we have to transport those goods halfway around the world. In an environment where oil prices are so high and ships are running on oil, the simple arithmetic has to be done. Does my cargo have enough value over there that it has a net profit margin after the transportation cost of oil for shipping it over there? That kind of simple arithmetic must be done. If we can get it there economically enough, certainly there is a market for it. As I mentioned, India's needs are so great that they will generate power from any and all resources they can get their hands on.
Senator Robichaud: Would India pay attention to the green value of that project?
Mr. Dhillon: Yes. I sometimes feel sorry for the Indian government. They have such vast problems to manage that it truly is amazing that they do actually manage them and keep the country ticking. There is a strong undercurrent in the Indian government to tackle the environment. The environment has been devastated in India. Industry has been irresponsible to an extreme degree, pumping industrial effluent into every canal, river and streambed, and cities pump raw sewage into rivers. Those rivers that were holy or just beautiful to look at are today just running sewer systems. India needs to tackle environmental issues in a significant way.
I will try to be brief, but all aspects of the environmental sciences, expertise and services will be required in India, and the Indian government is pushing hard towards that goal. As I mentioned, last year they came up with one of the world's most aggressive solar policies, 20,000 megawatts by 2020 and 200,000 megawatts by 2050. Being India, I immediately discount that by 50 per cent and say that if they are targeting 200, they may get to 10. Regardless, it is huge, and the government is serious. We need to be able to deliver it economically.
Senator Downe: I thank the witness for being here today. Obviously you are a very busy person, and we appreciate you taking the time to educate us.
I wonder about your experience dealing with Canadian institutions as you try to do business in India. Have EDC, the Business Development Bank and the Canadian embassy consulates in India been of assistance to you? What would you recommend they could be doing better?
Mr. Dhillon: The Canadian embassy people have been terrific. They are always open, friendly and ready to help. Sometimes the capacity to help is not there. Sometimes they, again like true Canadians, are a little shy on stepping out boldly and making statements as representatives of the Government of Canada. They need to become a little bolder about that, and I guess that would come if the signal from Ottawa comes to be bolder and say more things about the Canadian government and ourselves.
As to the other institutions, I cannot really speak to Business Development Bank because I have not approached them at all, yet. I have approached EDC a number of times to assist on some financing. We are carving out new markets. It is high-risk business, and we do not say it is not. In a high-risk business, entrepreneurs and businesses require some availability and accessibility to high-risk capital. In Canada, we have no such institutions. Howe Street is known worldwide, unfortunately, as the gambling casino of the world, and that needs to change. What happens if we take a legitimate deal to Howe Street that is in places like India and is not mining related? Mining is the king of the world. If it is an industrial deal or a complex infrastructure project, Howe Street will not raise a dime, and they did not raise a dime of risk capital for me. I said, "You guys fund ridiculous deals all over the world that I can tell in a minute will not going anywhere." They said, "We know that game." The game? It is in the playing of game.
I have been knocking on Bay Street doors for 15 years and trying to educate Bay Street bankers on the potential of the Asian markets. To date, we have no single investment banking institution in Canada that has any presence in India. The time I was in Mumbai, I met the first single representative investment bank put in there by Scotia Capital. That person is alone, while we can look at Morgan Stanley, JP Morgan, Goldman Sachs and HSBC Bank Capital Markets. The English investment banks have been there for 100 years, and the Americans for the last 10 or 15 years. Citibank went from zero 15 years ago to the largest issuer of credit cards to India. It became a significant banking presence. Where are the Canadian banks? We still have three or four branches, small ones that no one knows of, by Nova Scotia and maybe two or three TD Canada Trust branches.
We have giant banks that have the favour of government protection for foreign infiltration here. Why are we not using our leverage to capture market share abroad?
Canadian businesses desperately need financial communities to get with it and become part of our activity in India. Otherwise, as we keep saying on Bay Street, they will come and buy you. We will not be buying them; they will buy us.
Unfortunately, Canadians are quite happy with that. If they write a big enough cheque, we do not care. We should care because true sovereignty comes from being independent. If you will be bought up by everybody and you will sell all our resources; financial institutions; and Nortel, our technology giants and expertise technology; my question to the finance minister was: What will we sell; what will we do?
We have already sold out on manufacturing sector and we cannot compete. Did we try? Now we are getting hampered on the services end. Engineering that used to be done in Canadian — and Canada was one of the leading countries for power and infrastructure engineering — all the raw engineering is done by Indian engineers, which gets SNC-Lavalin's stamp because the job is in Algeria.
They will one day stop looking for us to send them the jobs. They will go to Algeria and get the jobs themselves because they are coming up to the expertise level fast. Like we have on manufacturing, we will give ground on services. What will Canadians sell next?
We cannot bank in this part of the world; we do not understand it, have not been there or given it a try. Our investment banks do a few deals out here and get very happy. They can play golf on the weekends and have BMWs to drive. That is good enough, they think.
It is not good enough if you are looking down the road. It is only good enough today. That is why Canada is losing ground. Our investment bankers are being overshadowed, our engineers are being overshadowed and our manufacturing base is being eroded.
One of the counterintuitive things I have done recently is put a 200-megawatt facility in southern Ontario and ship the product to India. Bay Street reacted by asking if I was out of my mind. Bay Street asked why I was putting a manufacturing facility here in Canada when India is a low-cost country. I said I was not out of my mind and these are the reasons. We can do it; it is the perfect opportunity for us. They never thought of it that way. They said, you are right; this might actually work.
It is absolute, unmitigated apathy that is endangering our entire economic fabric.
Senator Finley: Mr. Dhillon, you have almost inspired me to go back into private industry and go back to India again.
Mr. Dhillon: We need you, as a senator, to go to India.
Senator Finley: I am really impressed by the approach and the attitude you have taken, and I say "long live" to you.
Mr. Dhillon: Thank you.
Senator Finley: So many people come to us and say, "This is what the government must do." I am really just trying to confirm a point here rather than ask a question.
You are placing the future of Canadian business in India quite clearly in the private sector as opposed to the government sector.
Mr. Dhillon: That is right.
Senator Finley: I greatly applaud that, by I way. However, the government certainly has a role to play. I wonder if you could distil very quickly what you think that role might be; how best we can use government resources or government capabilities to encourage private industry to do exactly what you are saying — to take more risk. What would you suggest?
Mr. Dhillon: For your level, which is the highest level of Canadian government, the most critical attribute a government must have when going out into foreign markets for business is respect; our government must have respect; otherwise, we are on our own.
Here is a small example. Enron had its contract cancelled back in the early 1990s with the infamous Dabhol plant. It was all Enron's fault. It was not India's fault, but was portrayed that way. The secretary of trade in America picked up the phone the next day and threatened India with trade sanctions because an American company was being hard-done by. It was a wrong move — an absolute mistake — and the Indian government rightfully bristled at that and thought, "On one company's behalf, you will jeopardize everything?" It was a stupid way to do things. However, it had an impact in India. Enron had the instant backing of the entire American government infrastructure, which also of course has the big stick shadow in the background.
Canada is in a better position. We have a better profile in those parts of world because we do not do stupid things like that. We need to not only keep that profile, but also build government muscle in those places. As I mentioned to the senator, we need to have consistent, constant presence. We need to take on things that are important to Indian government. We need to engage with them personally to assist them. That will get us respect.
The Indian government must have real respect for the Canadian government. At the end of the day, whether it is schoolyard bullies, college bullies or the bigger world, if you do not back up your statements and your nice attitude with real muscle, no one cares how nice a person you are. They will beat you on the head and take whatever the heck they want, whether it is taught in school or later in life.
Canada must have muscle. It must have diplomatic muscle and it must have political influence. Our government must have respect.
The Chair: You indicated that we should have muscle and that means business should take risks. However, you also said you want that high risk covered by government insurance; am I correct.
Mr. Dhillon: I did not quite say that.
In our case, Howe Street and Bay Street turned us down and EDC had no money. First, I put my money on the table, along with the money of my family and my friends. It is a typical entrepreneur story, only the scale is larger and the monies put on the table were bigger because I squeezed more out of everybody I knew.
I never expected India's power sector to come off the rails after I cleared all my projects, but it did. Then we faced the decision of whether to go back home because we were busted, or to stay and throw more money at it and dig in. We decided to dig in. We went to Howe Street, Bay Street and EDC. Everybody turned us down flat. In fact, one of the senior vice presidents at EDC said he was sorry to say, but EDC is really like the Royal Bank of Canada with the same banking principles. My response was: "Why am I talking to you? I should be talking to Royal Bank." Although, if I go talk to them, the answer will be the same as theirs: It is too risky; I am sorry, we are conservative. Where is the collateral?
I understand that. When we heard those answers, we just dug in deeper. We studied the securities regulations. As a company that is in power, we became securities regulation experts. We wrote up our own offers and memorandums and went door to door and raised money through exemptions available in all provinces. We became our own underwriters. We did not take no for an answer. We committed to the market and wanted to get there.
In recognition of that, not all Canadian entrepreneurs will have the same stomach for this thing. Not all businesses will have the same vision; they will need a little assistance. If the Canadian government wants Canadian business to carve out larger market shares in emerging economies or the global economy and truly diversify from the American economy, it will have to think in terms of partnering with business, like the Japanese do. The South Koreans, the Israelis and the Germans do it. Their governments are there and they have significant amounts of financing available. Their entities can tap into the financial markets and investment bankers and raise the capital required. We do not have that type of partnership.
If we as a country want to do what Canasia is doing — grab big business and bring it home — we will need to change our model of fragmented, separate effort. We will have to become a cohesive force, a united Canadian front. It will require political, diplomatic and business acumen and financial capacity for Canadians to grab market share.
Why is that? The others, your competitors, can do everything you can do. If you are fragmented and they are cohesive, you will lose. It does not matter how creative you get. Not everybody is like we are and willing to fight for 16 years. Canadian businesses, in general, will lose. For that reason, we need that cohesion.
The Chair: You did a good job of summing up what the strategy should be in Canada. You have been bold, blunt and provocative. You have certainly accomplished your task in providing the kinds of information and perspectives on how to do business in India from your perspective. Perhaps you will see some of that coming through in our report. Thank you for your time and thank you for challenging us.
Mr. Dhillon: Thank you, Madam Chair.
The Chair: Honourable senators, we will have a meeting next Wednesday, but not next Thursday.
(The committee adjourned.)