Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 7 - Evidence - May 12, 2010
OTTAWA, Wednesday, May 12, 2010
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:15 p.m. to study the rise of China, India and Russia in the global economy and the implications for Canadian policy.
Senator Peter A. Stollery (Deputy Chair) in the chair.
[English]
The Deputy Chair: Honourable senators, I bring the meeting to order.
Our first witness is Mr. Niraj Bhargava, Chairman and Chief Executive Officer, Energate. He is a former dean, Royal Roads University School of Business. He holds both a professional engineering designation and an MBA. He has had an active career in the private sector. He was President and Chief Executive Officer of Enerstat Limited, an entrepreneurial high tech company. He has also been a director of global marketing and sales for General Electric Co. and a marketing and R&D specialist with Northern Telecom.
Niraj Bhargava, Chairman and Chief Executive Officer, Energate: It is a pleasure to be here with you today. I hope we can have an open discussion, I anticipate my comments will be helpful and I look forward to your questions.
I have titled my short presentation "Barriers to International Trade," and I am hoping that my perspective will be helpful to your deliberations, recognizing there is a focus on international trade. I will use our company, Energate, as a case study for your deliberations and an understanding about the challenges of growth, the opportunities for international growth and also the barriers to that growth.
With respect to the proposed agenda, I would like to suggest that we focus our time together on micro realities rather than the macro issues. I know you have had a fair bit of time to deliberate on the macro issues, and they are important. I am hoping my perspective on trade at a micro level, again using Energate as an example, on what is going on in growth companies, will be a fresh one. I am happy to spend time on Energate's opportunity in India and how we see growth there, but I could also comment on China and Russia.
I would like to give a brief introduction of myself and Energate, spend a few minutes on the macro context and use that context to go deeper into the micro challenge of recognizing that small to medium-sized companies are a big part of Canada's economy. What are the implications to SMEs looking at international trade in those regions?
Energate is a private company in a competitive market, but I would like to be open about what is going on at Energate, our competitive advantage, how we see trade opportunities, things we can do about them and perhaps the support that we could use to be effective in international trade, focusing on India in particular.
I offer myself as somebody who has had experience in the challenges of growth in small to medium-sized companies, though not as an expert on trade in India and Russia and China in particular. I certainly have perspective on the regions. I have travelled and done business in India, China and Russia and have experienced trade, but most of my expertise is in the challenges of growth and building a successful high-growth company.
In the introduction, you heard about my background. I have a perspective from large companies like General Electric and Bell-Northern Research. I have been CEO previously and am leading a growth company called Energate. I also spent some time on faculty at Queen's School of Business and, at that time, I led a research study on the opportunities for growth and high-growth companies and some of the implications for managing growth. I offer some of that experience as well for our discussion today.
Let me start with the macro context.
I would like to offer some assumptions of conclusions that we have in common. The first one is that India, China and Russia are important markets for Canada. There is clear evidence that business trade should be encouraged in those regions, and I offer myself up as a convert. I believe we should focus a lot of attention on growth in these regions, and I believe that, in the coming years, India specifically could be a very important market for trade, perhaps as important as what we see now with the United States. There is lots of movement in that direction, and I certainly recognize it as an important market. I agree with the notion that business trade with that region should be encouraged and facilitated.
There is lots of data to support that Canadian business and the participants in trade are dominated by small to medium-sized enterprises. Over 80 per cent of Canadian companies are SMEs, with over 70 per cent of job growth and about 50 per cent of the national output. We can debate the detail of those figures, but clearly a large amount of our economy is dominated by small to medium-sized companies. Within that segment of SMEs, half or perhaps more than half are lifestyle companies or micro companies that are not trade oriented.
What is left are the high growth companies. We can call them different things, innovative growth firms, but they are growth oriented SMEs that are looking at high growth, and trade can be an important part of their growth trajectory. I offer that as a key segment for our attention when we talk about international trade and what we can do to support that activity in this region.
Over the last couple of years, there has been quite a correction in our global economy and a lot of change. That has therefore put some industries on a downward trend as far as their growth opportunity, and others on an upward trend. We could talk about the ones moving in the right direction and those not moving in the right direction, but one area that I believe is a rising industry, and there is lots of evidence to support it, is clean technology and green technology, what I like to call the new energy economy.
As someone experienced in the new energy economy, we must recognize that we do not have a sustainable strategy for the use of energy globally, that we have to look at energy in new ways, whether renewable energy or energy efficiency. There are many opportunities for innovation and technology in the area of clean technology and energy.
With those recognized elements of the macro environment, I would propose that we spend our time talking more specifically about the challenges of growing SMEs and how International Trade could be of support in this sector.
A few years ago, at Queen's, I led a research program on the creation and management of high growth firms, and a number of people questioned us on some of the challenges of sustaining growth in our economy. I quote Gord Nixon, CEO of RBC Financial Group:
While Canada and the U.S. have comparable rates of new business creation, Canada lags significantly in the growth of these new businesses into medium and large enterprises. The lack of a sizeable medium-sized business sector in Canada, and the country's lagging ability to grow large firms fast enough to replace those that are disappearing, is an issue of importance to the future prosperity of Canada.
I think Mr. Nixon is saying that while there is a lot of creation and entrepreneurship going on in Canada, there is perhaps a hollowing out of sustainable growth. When we talk about prosperity, a lot of our growth comes from entrepreneurship and innovation, and we want to sustain that growth. International trade could be a large contributor to sustaining growth in our innovative growth firms.
Let me go to one of the conclusions of our research a few years ago. The challenges these growth firms face, what the CEOs are dealing with and what is keeping them up at night as far as sustaining growth, may or may not be what you think they are. From point of view of government, banks and regulatory groups, there is an assumption that the issues are about taxation, regulatory regimes, rules and policies. These are all important, but really, when you talk about what is going on in these growth firms, managing growth is a challenge in itself. There is lots of change going on in these growth companies, and most data show the management of that growth and change as the number one challenge for these companies.
Dealing with human resource issues, ensuring you evolve the management team appropriately, dealing with sales and market development issues are all important elements to managing and sustaining growth in these companies. All this activity is preoccupying the leaders of these growth firms, and dealing with international trade and considering India may not even be on the radar.
There is a lot to do in sustaining growth in these growth companies, and I do think that most everyone would argue that there is opportunity internationally when you look at new markets like India, but it is not necessarily on the radar in the deliberations of the management teams and the executives of these growth firms. That in itself is something we should recognize as we develop policy, and we should recognize the environments of these companies as we try to encourage and facilitate international trade.
With that, I would like to introduce you to Energate. I am happy to talk specifically from our perspective. Energate is a young company, founded in 2004, headquartered here in Ottawa. We have commercialized home energy management solutions. The core team has decades of experience in home controls and communications. We are privately funded for growth, and we focus our growth on North America. We commercialized our technology in 2007, and over 90 per cent of our sales are in the United States. We have delivered well, and we have had recognition as leaders in our space, our space being defined as smart grid and demand response, which I will take a moment to define. We deployed our technology, and we have a vision to become, not just a great small to medium-sized company, but a global success, a billion dollar company, a profitable and sustainable company, right here from our Canadian base. We have a good start in Energate's pursuits, and a number of partners have validated our business and we are pleased with our momentum.
Let me take a minute to talk about the market that Energate is serving, because it may be relevant to how we talk about India as well. In the United States, there is a new kind of energy crisis, and that is the recognition that energy demand continues to grow rapidly despite the fact that the economy is challenged. There is not enough power to sustain that growth and demand.
Historically, when demand was growing, utilities and energy companies would just build new power plants. They would go to the regulators, look for approval to build the new power plant to keep up with the demand and keep the lights on. In today's environment, utilities are not getting approval to build power plants. They are recognizing the significant cost as well as the environmental impact, so regulatory bodies are saying no more power plants, by and large.
What are utilities doing to ensure they can sustain their requirements to provide energy? They are looking at new initiatives — renewable energy, energy efficiency and demand response. We all applaud renewables, but data show that is only a small slice of the pie. The largest, most significant way for utilities to manage energy is to manage demand and to use technology to affect changes in demand. In the United States, this is a large trend, to the point where the Obama administration has announced billions of dollars of stimulus to make the leap to smart grid demand response and energy efficiency to allow sustainable energy use.
The topic of demand response is the notion of reducing peak demand and shifting that demand to the valleys, essentially avoiding the need for a power plant by reducing peak demand. Demand responses are mechanisms to encourage consumers to shift their demand. Energate is participating in this territory, and the business case is compelling for utilities because the technology allows that shift in demand to be more effective than building new power plants.
What is driving this demand is interesting. People may think it is the industrial sector or large commercial buildings, but it is actually small buildings, our homes, the air conditioning, water heating and major appliances. By and large, air conditioners are the biggest contributors to what is driving that peak. Home energy solutions are a huge contributor to that peak demand and what is going on in the energy sector.
Utilities have done lots of analysis and have come to recognize that it is more cost effective to employ technologies to shift demand than to build power plants, to the point where demand response is considered 40 per cent to 100 per cent less expensive than peak generation. A market has been created in the United States that is driving demand for technology like Energate's and that is a lucrative market.
Let me shift to India. The growth is at such a large clip in India, and the market opportunity for companies like Energate and our technology is larger in India than it is in the United States. In India, demand has already exceeded supply. Here, in North America, we are trying to keep the lights on by ensuring that we have enough supply for peak demand and by using energy efficiency and demand response. In India, it is too late. During air conditioning season, blackouts are common place, to the point where, in New Delhi, you can be without power for eight hours daily because demand has exceeded supply. We cannot build power plants fast enough in India. No matter what the environmental imperative is, the requirement for building power plants in India is as fast as possible. If they can use technology like ours to shift demand, there is a compelling opportunity in India to improve their penetration and provision of power. The data show that demand has exceeded supply by 17 per cent, and that trend is growing and has grown in the past few years.
Energate is about providing a solution to utilities, software for the utility to control energy demand, hardware for the home, smart thermostats, communicating switches for water heaters, and allowing the utility to either shift load or to send price signals so the consumers can make their own decisions. There are multiple ways for demand response and Energate has commercialized leading technology, software, hardware and communications to address this phenomenon. We are at the point where we are a leading provider of technology in the United States market.
Here is Energate's challenge: We have a phenomenal opportunity in the United States. We are getting good early traction in market penetration there, new utilities, and accolades about our position and our leading technology for the U.S. marketplace. We are consumed with the growth opportunity in the United States. At the same time, however, we recognize there is a large global market opportunity.
In the package that I have shared, is data about the size of the market in North America, Europe and Asia. As I mentioned, in India, there is an imperative now to take advantage of technology like ours. Obviously, there is a cycle to pilot the technology to ensure that everyone understands it, but the market in India is as it is in the United States.
Let me bring it down to some conclusions before I accept your questions. There is a global opportunity for high- growth companies like ours. Energate is a good example of that. In our case, the North American market is complex. It is a challenge to navigate that market. One of the realities in companies like ours is that we do not have abundant cash. Raising capital in today's market is not easy and we barely have enough capital to penetrate the North American market. We are on our way to penetrating the United States market. About 300 utilities have funded programs and our team is working with or trying to penetrate them. We have a competitive advantage, but it is about speed, activity, and focus in what we are doing.
India is undeniably a very attractive market. How does a company like Energate resource manage and execute an India strategy? I had the opportunity to visit India again with Premier McGuinty's clean technology mission in December. I have visited India in the past and I have an understanding of that opportunity, but I cannot say that we have done enough to understand the strategies that we need to deploy. Is it the right focus? It would be more of a distraction for us now because there is so much activity in the United States.
I offer that as context and I welcome your questions. I believe Energate and high-growth companies like us are the kinds of companies that will be able to help that trade activity, but there are challenges in our environment to pursue that as activity.
[Translation]
Senator Fortin-Duplessis: After centering its monetary policy on the economic recovery, the Reserve Bank of India is now fighting inflation that's at its highest level in 17 months.
The short term key interest rates have been raised from 5 per cent to 5.25 per cent in order to contain a price hike that almost reached 10 percent in March. The issuing institution has opted for a minimum increase, mainly to try to avoid hampering economic recovery. I am sure you have seen how things were going when you were in India. So could you please tell us if this measure has greatly affected Indian companies? How are they doing today? And more importantly, how are your company and its partners doing. Have they been affected by this intervention?
[English]
Mr. Bhargava: We know that there are lots of these changes going on in India, but they have not manifested themselves to the point where it affects our business at this point. We understand that the Indian companies are dealing with these changes. However, from our company's perspective, we are in our early days of penetrating the Indian market. The message we received is that the economics are compelling for our technology. Therefore, changes of the type you are talking about are not affecting the economics or the propositions of our offering.
Essentially, utilities are our primary customer. If we can avoid building a power plant, it is a compelling economic situation and the changes that you are describing are not affecting our business directly at this time.
Senator Segal: I thank our witness for his thoughtful and strategic presentation. It is great to see a former Queen's business school faculty person out in the real world making real money and doing well.
Mr. Bhargava: Thank you.
Senator Segal: When you talked about the top challenges for high-growth companies in the general sense, you listed human resources as No. 2 and you listed capital and cash flow and taxation as No. 9 and No. 10. When you talked about your own particular case study with respect to penetrating the Indian market for demand control energy technology, you listed capital as the centrepiece.
It would be helpful for this committee if you could give us your own sense of what the reality is around capital sources. I will share with you my bias, which you may correct with more on-the-ground, factual experience. My bias is that the banks talk a great game and actually are never there when it matters. They only lend money to those who do not need it and we have federal government agencies that will ensure receivables — Export Development Canada and all that stuff, which makes a big difference. However, to get access to capital to be in a place for three to five years and develop some roots is difficult, unless you become associated with a specific investment fund which has that as a purpose and whose rates of return are relatively high in terms of what they demand. Venture capitalists are often called, unfairly, I am sure, "vulture capitalists." The well is actually quite dry.
I would be interested in your views about whether that is a matter for which there should be a public policy response. Should we be saying something to our international lending institutions and stepping up for the small and medium-sized companies, or is there sufficient incentive for the private sector to get there, either in terms of our tax system and the rest? Should we be thinking about recommendations along those fronts.
It strikes me that one of your option might not be one that you, your shareholders and principals care to embrace. There are large Canadians interests now operating in India. People are trying to sell railway cars and people are in various aspects of the macro infrastructure/engineering business and others. They would be more than delighted to offer your services and your technology as part of their gross solutions to major problems. You might say: We do not want to do that. We want to be independent, because that is our mission.
I would be interested in your perspective on that subject.
Mr. Bhargava: It is a topic close to my heart. First, your observation of the data versus what is going on in Energate is valid. The data are a few years old. Markets have changed considerably on the financing side. Also, those were aggregate data of many companies versus our specific situation.
Venture capital is difficult to find today, to get to your premise. When you talk about sources of capital, banks play a role, but it is not risk capital. It is no-risk capital. It is a role, but it is not a role that will help us on the mission we are talking about right now.
Are there other sources of capital? There are a few, but the main growth capital we are looking for is risk capital. Venture capital is one of the common sources. Is there very much venture capital available in Canada? No. Despite the fact we are in a sector with attractive growth rates, it is difficult to find venture capital and it is quite a process.
We are venture-backed and have financing for the North American market, but it was not an easy process to pursue. To do so for an international front and a lucrative opportunity in India is another process and one not easy to pursue.
I agree with your suggestion that we encourage more risk capital, assuming that growth of companies like ours is something the Canadian government wants to see, which I expect they do. We need more sources of risk capital and the barriers to that should be addressed as best we can.
One of the challenges for us is to find the financing to pursue a strong opportunity in India.
Senator Segal: Perhaps others have the same view, but I have been led to believe that there is quite a series of large capital pools in India that are looking to make strategic investments. From everything you have described about your company, it strikes me this is about as timely and strategic an investment as an Indian investment pool might want to engage in.
Aside from the fact that investment pools are, by definition, highly discretionary and subjective everywhere in the world, are there any other barriers that you as a Canadian company face? Are there regulatory barriers that say, if you are not an Indian-based or -incorporated company, they cannot invest? Are there other constraints you face?
Also, if it is not proprietary, can you share with us what contact, if any, you have had or tried to have with the Indian pools?
Mr. Bhargava: I have not had direct contact with many of those pools yet. A number of the investing groups here do have affiliation with those pools there and recognize there are such pools.
I come back to the reality of Energate. We are consumed by the U.S. market and opportunities here. Therefore, the time and effort required for not only getting sales but to find the right financiers and investors is significant. There are only so many hours in the day.
Senator Segal: Could I push you on the human resource side? If I said to you I have private-sector investors who would love to put $20 million into your initiative, specifically in India.
Mr. Bhargava: I will pass you your chequebook.
Senator Segal: You are focused and all your people have full-time jobs now, including yourself. Would you be able to assemble the human resources on the ground both here and there to give a pro forma to an investor about a reasonable rate of return over a reasonable period of time?
Mr. Bhargava: I absolutely believe we could. We need to build that business plan. Even resourcing that business plan will take some time and effort. I think the model would be to have a new pool of talent focused on the Indian marketplace rather than trying to do it off the side of our desks here. Obviously, an Energate India is in our mind in terms of how we create the right infrastructure to pursue the Indian market, go deep and understand that marketplace.
You will not be able to do it effectively from here. We would resource ourselves appropriately for that marketplace and have the business plan to spend that $20 million wisely.
Senator Segal: Would the Canadian High Commission offer you any assistance, intelligence or advice about reality on the ground or would you view that as a waste of your time and theirs?
Mr. Bhargava: I believe we would want to tap into all of those resources and contacts and make as much use of them as possible. However, again, we are looking for the most effective support possible. I am sharing the specific realities of our kind of company because they may or may not be as well aligned as they could be.
Senator Downe: In your presentation today, you indicated the bulk of your work and business is currently in the United States. Without telling us any corporate secrets, did you have any assistance from the Government of Canada, such as from Export Development Canada and Business Development Bank, in penetrating those markets?
Mr. Bhargava: There is assistance from the Government of Canada. I would say the number one assistance that I and others in growth companies can highlight is in the R&D side. We have good support in R&D in Canada and it is a competitive advantage. It is helpful to build the technology effectively from our Canadian base.
One of the challenges is to ensure we commercialize it effectively and sustain our company so that we are not just inventors but are able to sustain ourselves in the long term. That is one of the large benefits in Canada.
I would not say we have taken advantage of much other support outside of the support in R&D. We have more recently met with some of the trade commissioners and there is an openness to work with us on some of the utilities and opportunities in the U.S., and we will tap into that. However, thus far, we have not really had good opportunities to take advantage of some of the support that may be there to do what we are doing.
Senator Downe: I am hearing you say you have not taken advantage of it because you have not really tried. It is not that the government was not helpful.
Mr. Bhargava: Yes. We have had a couple of attempts to understand the opportunities with BDC and EDC and they did not seem to align well with where we were at. The trade commissioner offices are a new opportunity that we have not tapped into as of yet.
Senator Downe: We had a witness a few weeks ago who indicated that, 20 or 30 years ago, Canada had a very good reputation and a bit of an advantage in India. However, since then, other countries, like Germany and Israel, have jumped ahead because their governments are working with their business communities on capital and ensuring there is enough available. You have identified that as a problem. Would you look to the Government of Canada to duplicate what other countries are doing?
Mr. Bhargava: I think the availability of capital would support companies like ours. It does appear that Canadian companies are not as active in India, overall. There is a lot more activity from other countries than there is from Canadian companies. In terms of most of the people we have called on thus far, we are probably the first Canadian company to have called on them. Therefore, they are more used to companies from other parts of the world, but hopefully we can change that.
Senator Downe: Are you aware of what South Korea, Israel, Germany and the U.S. are doing in this area?
Mr. Bhargava: I cannot say that I am.
Senator Mahovlich: Looking over your presentation, it seems that your thermostats are controlling the heat and air conditioning in these buildings. Does India have a law that when their air conditioning is on, the windows must be closed?
I just got back from New Orleans. They have the air conditioning on with all the windows open in the restaurants. It is a waste.
Mr. Bhargava: I do not know if there is such a law, but I agree that the building envelope should go with your air conditioning activity. There are different challenges there. The window air conditioners are a big part of what is growing the peak demand in India. People are installing diesel generator backups because the power keeps going out.
I think your point is that there are other ways to be more effective in your use of energy than just building more generation. Energy efficiency absolutely is something they should be pursuing, as well as the shift of peak demand to off-peak times.
Senator Mahovlich: I do not know if you know anything about biomass, but Europe is aggressively pursuing biomass as green energy. I was wondering about India. Are they looking at biomass at all?
Mr. Bhargava: I am not an expert on that specific topic. I do know that renewables are being looked at actively. From our perspective, we find renewables will only get a small slice of what is required. Energy efficiency and demand response is where we are focused. I am not aware of the biomass penetration in India.
Senator Marshall: I found your presentation very interesting — parts of it were absolutely fascinating. This is the third meeting I have attended today where the discussion has been focused on energy.
Correct me if I am wrong, but my understanding is that while you are breaking into India primarily your markets would be in the U.S. and Canada?
Mr. Bhargava: That is correct.
Senator Marshall: Could you give the committee some idea as to how the recession has impacted your business, especially since the experience in Canada and the U.S. has been different? You indicated earlier that there was limited access to capital. Could you give us some feedback as to how the recession has impacted both markets?
Mr. Bhargava: It has definitely affected us in multiple ways. One of the ways is the abundance of capital has shifted downward over the last year. As far as the customer base is concerned, the requirement for utilities to make change quickly shifted to the right because the power demand was not as high in 2009-10 as was originally forecast. Because of the downplay of manufacturing, there was more abundance of power than they thought there would be. That reduced the imperative to move on some of these projects as they may have expected.
On top of that, the stimulus funds announced by the Obama administration had a reverse effect on us a year ago. When that was announced, all of our customers who were ready to do projects said why pursue it with the budgets we had allocated if there is an opportunity for stimulus funds? Therefore, the market stalled for a number of months for our whole industry.
In November, when they announced these projects, the market opened up again. That is another effect that the changing economy has had on us. However, that stimulus is a positive thing overall in the U.S. It used to be that half of the utilities were thinking about smart grid and demand response; now it is pretty well all of them. There is recognition that this is a reality. There are a few different ways that the economy has affected us.
Senator Marshall: Have you noticed any difference in Canada? Has business increased during the recessionary period or decreased? What do you think will happen in the future? What is your feeling, based on your experience now in your business?
Mr. Bhargava: As I mentioned, over 90 per cent of our sales are in the U.S. We are tapping into the Ontario market that has the same demand response requirements, but they also felt that the imperative was not likely as high as it was expected to be because of the power demand.
We probably have not had the effect you might anticipate on our activities because we are dealing with utilities with large power projects. The business cases are compelling, whether or not the recession is in place. However, there has been some effect.
Senator Finley: I would like to talk about venture capital for a few moments, and also Indian partnerships.
On the last page of your presentation, which you did not actually address, you talk about needing support and help. One of the items you have focused on is the identification of strong candidates to quickly lead and staff Energate in India. Would this extend to taking on Indian-based partners? Second, have you attempted to work through any Indian-based partners so far as sources of venture capital? Also, to what extent have you reached out to our trade offices in India to look for partners? Have you started that process?
Mr. Bhargava: Thank you for highlighting the final chart of my presentation, which has some practical suggestions of things that could benefit us. The problem is distracting our focus team, so support is welcome. I highlighted multiple kinds of support there.
Specifically to your question, we believe in partnership. We believe in it in North America; it is an important part of our model because it is a complex offering, this whole smart grid activity. We are very much involved in partnerships here and we would want to do the same there. Channel partners are important, so I think there should be opportunity in India.
We have started that process, but I would again say we have not done it justice, both on the financing and go-to- market partnerships. The trade offices have provided some help. So far, I cannot be critical of them because we have not asked, as much as they have offered.
I believe there should be sources, both for market partnerships and financing partnerships. However, the challenge comes to the fact we are a company that is consumed with the U.S. market. How do we give it the attention it deserves to penetrate those partnerships possibilities? I do not know enough to know if there will be a lack of venture capital if we pursue that partnership.
Senator Finley: Listening to your various answers and also to your presentation, one gets the impression that you are heavily focused in the U.S. market, but you almost have an envious look at the Indian market. Is there a possibility — perhaps you can give me a time frame — where the window might close on you?
Mr. Bhargava: That is a concern. That is the same concern we have in the United States. Having the best technology is not enough to be successful. Going to market effectively is very important to sustain that growth; it is as important as having the right product.
We are pursuing the U.S. vigorously because we have a lead right now and we want to leverage it. Otherwise, competitors could catch up, even if it is an alternative kind of model. It is the same thing in India.
There is a big problem, challenge and need in India. If I wait five years to have the retained earnings to invest in India, I do not think the opportunity will be the same. I think we will be way behind. I would rather find a way to parallel process this and move into the Indian marketplace, but that is one of the challenges we are dealing with. To the extent that policy and government support can help, we welcome it.
Senator Finley: Are you a totally privately funded company?
Mr. Bhargava: Yes.
Senator Finley: Do you have ambitions to go public?
Mr. Bhargava: We believe in being a sustainable, long-term growth company with a Canadian base. We obviously need to have return on investment for our investors, so the topic of exit comes up regularly, rightfully, for our shareholders.
There are two kinds of exits, generally — acquisition or a public offering. A public offering sustains us. Acquisition may be the right decision for our shareholders ultimately, but we are serious about aiming for a public offering.
[Translation]
Senator Fortin-Duplessis: I want to ask you about corruption in India. According to a study published on April 6, 2010 by the KPMG audit firm based in India, 75 per cent of Indian executives believe that there is financial fraud and corruption in their country's businesses, and that the situation is worsening. Forty-five of the 1,000 executives surveyed consider that things are deteriorating in their own company, and that the amounts involved are very substantial.
Amongst the known victims, 87 per cent have been defrauded of more than $22,000, which compares to only 47 per cent two years ago, when the previous study was conducted.
Corruption is present throughout companies but mostly in the supply and distribution departments. You were saying that you were not quite operational over there; are you apprehensive or can you forge ahead without worrying about that? How serious is it for you?
[English]
Mr. Bhargava: That is a great question. We are aware that corruption is an issue in India. It is an issue around the world, and the statistics show it could be a higher concern in India. We are aware of that.
We take the view that integrity and respect are the right values for our company, and we are steadfast on those values. The good news is we also heard from successful companies penetrating India that are uncompromising on that as well, and that gives us confidence that we can be successful without compromising the values we have.
We obviously have to understand how to do business effectively in India, but corruption is something we believe we can steer away from and still be successful there. So far, the data and our experiences seem to support that.
[Translation]
Senator Fortin-Duplessis: What would you recommend to other Canadian companies willing to go over there?
[English]
Mr. Bhargava: I would suggest that we not be afraid of foreign markets. There is no doubt that things are different in different places. You have to learn and it takes longer when it is a different culture. My recommendation is that high integrity pays off no matter where you are.
The Deputy Chair: You talked about air conditioning. Our researcher and I, before we realized you were in that business, were talking about India. I was in India, before not only the days of the cell phone, but before the age of air conditioning. I spent my youth in the tropics, and for years I wondered when the penny would drop and there would be this massive air conditioning revolution that has gone on and about the cost of it all. I see it everywhere, in South America, Central America, Africa and India, and it is a massive problem because of the cost of energy.
Mr. Bhargava: The demand for energy is going way up, and we cannot sustain it.
The Deputy Chair: Thank you very much, on behalf of the committee.
Our next witness is Gurprit S. Kindra, Professor, Telfer School of Management, at the University of Ottawa. Dr. Kindra's recent research focus has been on the Asia-Pacific region. His recent publications include the Role of Marketing In Foreign Development Generation: Evidence from ASEAN Countries, Emerging Issues Related to Marketing Activity in Asia-Pacific Countries, Economic Transformation in Asia-Pacific and Implications for Canadian Business and Risks and Costs of Doing Business in Asia-Pacific. He is presently working on a World Bank project in the area of corruption intervention, as well as consulting for Health Canada. Dr. Kindra has worked in many countries.
We welcome you, Professor Kindra. If you would like to give us your presentation, senators will then ask questions.
Gurprit S. Kindra, Professor, Telfer School of Management: Mr. Chair and honourable senators, I wish to thank the Senate committee for this opportunity to appear before you today, to discuss the issues of the rise of China, India and Russia in the global economy and the implications for Canadian policy.
In the first half of my presentation, my comments will focus primarily on India, whereas in the second half, I will comment on an important competitive tool, Canada's branding and marketing strategy on the world stage. My concluding remarks will bring forth a few recommendations.
India's rapid ascendancy on the world stage is increasingly attracting attention in major trading economies around the globe. The leading demographic indicators are common knowledge. India has a population of more than a billion, with a rapidly increasing middle class and a voracious appetite for all good things in life. Within 20 years, India's middle class is expected to increase from 5 per cent to 40 per cent of the total population, making India the world's fifth largest economy, an economic power house.
Notwithstanding India's growing demands for imports, Canada's trade with India is miniscule. As others have pointed out to the committee, our bilateral trade with India is about 0.5 per cent of Canada's total trade. Our trade with China, by contrast, represents about 6 per cent of our total trade. When compared to other countries whose economies have grown at a more rapid pace, Canada's trade relations with India are not well developed. This is especially the case in the case of those markets like the U.S., Mexico and Chile, with which Canada has a free trade agreement.
As the committee has heard over the past several months, there are many opportunities for a trading nation like Canada to benefit from the rise of India in the global economy. I am aware that by this point in the proceedings, the committee has heard from many highly qualified commentators, so I have decided to focus my comments on specific areas of opportunity, and those are education as an export and Canada's shortfalls in marketing and branding itself. I will also suggest how Canada and Canadian companies might enhance their access to markets in India.
Honourable senators, when I left India in 1973 to study at Dalhousie University in Halifax, India was a long way from the modern economic and cultural force that it is today. Air India used the logo of the maharajah and there was a looming threat of famine in many parts of the country. In diplomatic and political circles, India was a source of exasperation. Commentators often cited India as an example of democracy's limitations. Financial institutions like the World Bank and IMF described India as an economic basket case.
Today, there is a sense of euphoria about everything Indian, from Bollywood films and fashion to India's economy. India's Prime Minister has a PhD in economics and his cabinet is stacked with educated driven individuals. India is no longer a basket case. Today, the World Bank and IMF hold up India as a shining example of a newly emerging economy.
Last year, when I was in Delhi, I attended the Pravasi Bharatiya Divas meeting of the members of the India diaspora. I watched the Prime Minister and his cabinet colleagues roll out PowerPoint presentations and executive summaries. They looked like CEOs and board members from the corporate world of the West.
India's strength lies in its vibrant democracy, its young population, its entrepreneurial culture and its inheritance of English, the common language of commerce. I can sit in a pub in Bangalore or Delhi and discuss business or cricket in the same way as I would discuss business or hockey in Ottawa or Toronto.
The political philosophy of Dr. Manmohan Singh, the architect of India's economic rise, and social and economic forces of globalization have reduced the cultural impediments and economic protectionism that has faced western firms since India's independence from Great Britain. Under the present government of India, the private sector has experienced unprecedented economic growth and prosperity. The extent of foreign business activity in India reflects the significant progress that India has made.
Last year, when responding to this committee, the Indian High Commissioner to Canada characterized many bureaucratic issues as mere irritants. He referred to the many profitable Fortune 500 companies happily doing business in India. That may be the case for large global companies, but the same "minor irritants" can be major obstacles for countries like Canada whose exporters are largely small and medium-sized enterprises. Needless to say, compared to Fortune 500 countries, Canada's SMEs do not have the same tolerance and patience, nor the resources and expertise, to cope with the myriad of changing and demanding regulatory and administrative requirements.
Canada clearly wants to become a player in the Indian marketplace. How can Canada compete effectively in a market dominated by the United States and other major trading nations in the region? How can Canada leverage our Commonwealth heritage and large Indo-Canadian community to enhance Canada's profile and presence in India?
As others have said, it is about matching Canada's capabilities and experiences to Indian demand in a particular sector. Canada has a huge competitive advantage in the education sector. We have created a national network of world class universities and community colleges that produce highly-qualified graduates. In other words, we have expertise in the design and delivery of education. However, our performance in exporting education has been dismal and sporadic at best. This is especially perplexing because a ready market exists for Canadian educational services in India.
In his submission to this committee in 2009, the Indian High Commissioner to Canada stressed that India does not have enough excellent institutions of higher education to satisfy its own domestic needs. For every bright student admitted to a top-tier school, 99 students must settle for second-rate institutions. He said India needs partnerships with good foreign universities.
Canada has failed to take advantage of India's shortage of world class universities. Instead, Canada's universities and community colleges focused on recruiting foreign students from India and China. According to Citizenship and Immigration Canada in 2008, there were 3,244 students from India studying in Canada. This figure was expected to increase by 100 per cent by 2009.
While this represents increased student enrolments in Canada and good news for cash-strapped universities, it is a stop-gap solution to meeting our current funding challenges. More importantly, the increased influx of foreign students to Canadian universities and community colleges is adversely affecting the quality of education that Canadian-born and foreign-born students receive in Canada. Crowded classroom, inadequate research labs, digressions into language training and declining levels of student satisfaction have resulted.
There is a finite limit to the number of students that can be accommodated in Canadian institutions of higher education. Our universities and colleges are largely subsidized through taxes that Canadians pay and our ability as tax payers to sustain our schools is being tested by student enrolment levels.
The Deputy Chair: I do not mean to interrupt your presentation, but I will ask you to summarize if possible. I am the person watching the clock. It would be helpful if you could oblige.
Mr. Kindra: I shall do that. Thank you for the suggestion.
To summarize in the area of education, we have a situation where Canada imports students from India and China rather than exporting our educational expertise to India. There is a construction boom. Universities are being set up and they are looking for partners, partnerships and expertise from Canada in various areas of educational endeavour.
Two years ago, the Telfer School of Management started to host something that came to be known as the "Forum for Canadian Companies." It is a certificate program where Canadian businesses send their people to learn various aspects of doing business in India. That program has been quite successful.
However, by and large, not much is happening in terms of Canada exporting our educational expertise to India. Ontario Premier Dalton McGuinty led a delegation to India in 2009 to drum up business for exporters. The delegation included four Canadian universities. No community colleges participated in the mission. The objective of the trip for the universities was, essentially, very traditional. They were trying to recruit students to come to study in Canada.
In the last several months, myself and many of my colleagues have received invitations from India either to teach there or to help them start and run educational institutions. This is an area that is sorely needed.
When I read about the Ontario trade mission, I felt that they should have done their homework in terms of gathering competitive intelligence and finding out, for example, that the Indian cabinet was considering approval of a policy allowing foreign universities to be set up and to operate in India. This proposal is expected to become law in the near future.
I felt that Canadian efforts ought to have been more proactive in the sense that this particular trade mission, in cooperation with DFAIT, should have been aware of this pending legislation and negotiated educational partnerships in India. The time to start working on that is now rather than later.
Besides satisfying the educational needs of Indian students, the export of educational services has many other benefits for Canada. By training Indian workers in Canadian systems and on Canadian equipment, we would create a demand for Canadian tools and equipment in India. As well, by knowing that there is a pool of reliable and skilled people available in India, Canadian companies would be encouraged to bid more on infrastructure projects. They would be more inclined and be more confident in bidding on infrastructure projects.
My second point is with regard to the branding and marketing of Canada. In the cluttered global environment of business, it is important to stand out as an entity, a brand name that represents something, that means something. Google, for example, is a brand name estimated to be worth $114 billion; IBM is worth $6 billion and so on. These are valuable things to possess — brand equity.
What is the value of brand name Canada and how much value does the tag line "made in Canada, conceived or designed in Canada" add to the company's portfolio of products and services? How much recognition, credibility and respect does our maple leaf garner in the minds of the leaders and citizens of the world? That is a very important point to take into account.
Country marketing and branding is a serious business. Last year, when the Australian government launched Australia's branding surge, the trade minister, Minister Crean, declared his country's brand as having an unashamedly commercial focus to promote Australia on many different fronts.
Today, India promotes itself as a land of opportunity, as a place where the world is open to do business. They deliver a uniform message under "incredible India." That is their tag line.
There is a surging demand for fresh groceries in India, for example. As family incomes increase, more people move to urban areas, and there is a growing demand. India's import for fresh fruits has grown by something like 217 per cent from 2004-05 to 2007-08, and apples top the list. When I looked at this example recently discussed at a seminar I did for Agriculture Canada, I began to realize that perhaps part of the problem why Canadian Spartan apples, for example, were not selling in India might be because of the brand name confusion. It means different things. Indians tend to buy Spartans from Washington, from any other place, but not Canada. Brand name confusion is I think part of the problem. It is not marketed appropriately.
To promote Canadian products, services and intellectual property in foreign markets, be it apples or green technology or education, Canada and our exporters need a single, unified message, a brand image that would help us compete more effectively.
Canada has no system of management or careful nurturing of the brand name. There is no shared common purpose to our brand name; our products are great but our brand is fuzzy and unclear.
India, China and many other countries in Asia, when people hear the name Canada, what comes to their minds is the stereotypical open spaces, clean air, the Mounties and the long cold winters. It is never RIM or Bombardier or Cirque du Soleil. We have to openly promote Canada and Canadian resources and our ingenuity to change how others perceive us.
Branding represents a psychological positioning in the minds of leaders and citizens of different countries. Agriculture Canada has its own approach to branding, CTC has its own approach to branding, DFAIT has its own ideas on branding, and this is a problem. DFAIT, for example, is currently running their own "Imagine Education in Canada" campaign in cooperation with the Council of Ministers of Education. All these variations and approaches to branding and positioning introduce confusion in the marketplace.
For many years, I have delivered marketing and branding seminars to senior managers in different departments of the government. When I ask them why we have so many variations of the brand name, invariably people say they like to retain their own version of the brand because of departmental accountability and the fact that it makes it easy for them to have their own control over their own version or variation of the maple leaf; they can control how they promote the product. At the present time, there are so many variations of the maple leaf and mixed messages about Canada that one wonders if any message is getting through at all. It is like herding stray cats.
Branding should be managed using the Johnson & Johnson approach — one single brand position, carefully cultivated and managed by the leader of the country, the chief brand manager.
To compare today to 1970, Canada was probably best known and recognized under the great brand manager, the former Prime Minister Pierre Elliott Trudeau. Through his international celebrity, he brought Canada to the top of the mind ladder. It is a psychological concept. Psychologists know there is a ladder in the mind. There are six or seven steps on the ladder, and to get on top of the ladder is a beautiful position to reach. You can be number one, two or three and below that you are a little bit lost.
Canada desperately needs a common national brand to represent our exports, tourism, education, culture, sports and philosophy as a nation in one single voice to the world. This is a government-wide task that probably would be, in my opinion, best led by the Clerk of the Privy Council Office, not individual departments of the government.
My third point today applies to the trade sector, or to any sector, applies to higher education, agri-food, and it is about choosing an appropriate location to do business in India. When you go to India, which I do fairly often, you find Canadian businessmen trolling large metropolitan cities like Mumbai, Delhi and Bangalore. You hardly see any Canadians in second-tier cities of India meeting with provincial government officials. There is a low presence in second-tier or third-tier cities, and there are good reasons for that. It has a lot to do with infrastructure, with big businesses feeling comfortable in the intercontinental hotels of the big cities rather than the uncomfortable environment in small towns.
I want to talk about the insecurity of doing business in India. This is one of the concerns I have had in my own dealings, as a small investor, as a person looking to retire and maybe buy a property in India to spend time there in my later years.
I have had a lot of misgivings and many bad experiences. I wondered what the position of the Competition Bureau of Canada might be on protecting the activities of people like me who want to invest or travel to India. I understand that Canada is negotiating with India right now under FIPA, the Foreign Investment Promotion and Protection Agreement, but it has not been implemented yet.
Also, the Competition Bureau, I understand, has been urging India to become a member of the network for intellectual property protection, and so on, and India still has not joined.
The point I am trying to get at is that there are risks associated with doing business, with enforcing law and getting justice in India. That is a huge concern for me. In order for SMEs from Canada to flourish and do more business in India — as well as individuals investing and looking to retirement years in India — they would need protection.
In the interest of time, I will conclude by saying that Canada should export education to India, rather than importing Indian students to Canadian universities and community colleges. This will not only reduce the stress on Canada's educational infrastructure, thus improving the quality of education here at home, but it will also open doors to a world of endless networking opportunities for our educational entrepreneurs.
Second, Canada should follow the example of many other countries throughout the world and create a unified, single, Canadian brand identity. This effort should be led by the Clerk of the Privy Council at the direction of the Prime Minister.
Third, Canadian businesses should venture into two-tier cities in India, where competition is less intense and opportunities in certain sectors, like education, are more plentiful.
Fourth, although Canadian businesses are excited by the prospect of trade and investment in India, they should always exercise diligence when choosing local business partners. For its part, the Government of Canada should work diligently with like-minded trading nations to ensure that adequate protections are in place.
One final comment, with your indulgence, is that just yesterday I was browsing through the newspapers, and I came across a news story about Mr. Bill Gates, Chairman of Microsoft. He is presently visiting a backwater town in India called Amethi. It is a real backwater, third-tier, small town. The reporters asked him what he was doing in this place. He said he has plans to convert Amethi into a new hub for IT and software development. There is a lesson to learn there, in terms of going out and being more proactive and not just staying in the big, metropolitan cities.
Thank you for the opportunity to share my views with you.
Senator Segal: Professor Kindra, let me express my thanks for the time and care you have taken in preparing your presentation for us.
Does the Telfer school itself, which is down the road here at the University of Ottawa, have any active exchanges with higher education facilities in India? Do you have any courses, either at the executive or MBA level, that assist Canadians who are interested in learning about how to do business in India, benefit from some of the cultural and other cross-business skill sets that you and other faculty members bring to the process?
As well, are you aware of other Canadian institutions that, in your judgment, do understand and are doing a good job?
Mr. Kindra: The Telfer School of Management has exchange programs with India, like we do with many other countries around the world. We have an India-focused program that is offered to businesses that are interested in doing business there. They get together for a two- or three-day session, which involves learning cultural differences, legal aspects, the basic ways and rules of doing business. They are encouraged to develop a business plan for doing business in India. In many instances they are encouraged to make a trip to India to get some on-the-ground training. These are people who are actually working in Canadian companies. It is a successful program that we have been running, I believe since 2008.
As I alluded to earlier and mentioned in my report, a number of other universities, mostly in Ontario, are proactive in creating partnerships with institutions in India at the present time. However, by and large, the focus is on either conducting joint research in Indian institutions or bringing students into Canada. The only institutions that I am aware of that are actually going out and creating partnerships, like offering quality MBA training to executives in the business sector, are the Ivey School of Business, Schulich, and that is about it.
The important thing to do for institutions in Canada is to go over there and enter into partnerships and perhaps eventually start their own campuses. India, as I said earlier, will allow the setting up of campuses in that country.
Last week I spoke with the head of the Construction Industry Development Council of India. He told me that he had approached the Association of Canadian Community Colleges to set up training of construction workers, the construction trades in India. After my discussion with him I thought it was a great idea, because that would give opportunity for Canadian businesses to not only have a ready supply of Canadian-trained Indians available to work on construction and infrastructure projects, but also it would be a great opportunity for Canadian businesses to introduce their equipment to the Indian market. That project, I was told, did not work out due to some certification requirements.
Senator Finley: Has the foreign educational institution bill that would basically opening up India to the kind of collaborative campus agreements that you have been talking about been passed by the Indian parliament?
Mr. Kindra: As far as I know, not yet, but it is expected to meet the approval. From what I understand, it is a fait accompli because there is not great disagreement over the bill.
Senator Finley: We have had a number of educational establishments before this committee over the past couple of months. I do not recall anyone talking about collaborative arrangements in India. They talked about how we could recruit Indian students to come here to Canada. That seemed to be the sole focus.
What you are saying is basically radically different from that. Are Canadian universities, colleges, commercial schools, et cetera, aware of this strategy that you are suggesting and the foreign educational institution bill?
Mr. Kindra: I believe not. If you are talking about geographically challenged university locations, like Lakehead, Laurentian, Algoma and Northern British Columbia, it is understandable. I have been to some of these places and I can see the current wisdom of recruiting students and creating revenues so the place can flourish and grow. When you think of major research-intensive institutions in Ontario and in the rest of the country, I think it is a major folly to fill classrooms with as many people as you can. That, in my opinion, has a negative impact on the quality of education in this country, and on the experience that our students ought to be going through. We end up, as I said earlier, in digressions of all sorts of language training programs, and the quality of education tends to go down.
A recent study that was completed at the University of Ottawa involved one of my colleagues, David Zussman. This study indicated that student satisfaction at the University of Ottawa, as an example, is one of the lowest among research-intensive institutions.
I think we ought to be taking our expertise over there. We are an exporting country, not an importing country. We want to export our services. We want to enhance our trade. Education is an important area. Not a day goes by when I do not flip through the newspaper or find on the Internet that a university in India, a new institution in some far-flung part of the country, is struggling to find expertise in management, education, medicine, engineering, and legal training. They are looking for help from Canada. This is where we ought to be focusing our attention.
Senator Finley: We would like to debate some of the finer issues of that particular track with you, but we do not have time today. I understand that, Mr. Chair.
I wanted to cover branding for a minute. Canada has some great brand names. They might not be Google, or Microsoft, or Apple, but there are some huge success stories. In Quebec, for example, we have Bombardier and Pratt & Whitney Canada, which are successful in power generation and in transportation. We have RIM and we have many others.
Rainbow Country is a cute name, and I have heard some of the Australian names. I cannot understand this detachment from Canada and a brand name. We have probably one of the most recognizable national flags in the world. We have certainly an easy national name to pronounce in almost any language. We have melded the name "Canada" to so many things: Trade Canada, Team Canada, et cetera.
When you talk about branding, how does U.K, France and Germany brand? I cannot recognize a brand image from any of those countries.
Mr. Kindra: I agree with you. According to a report that appeared on MSN.com the day before yesterday, Tim Hortons is Canada's leading brand. Everyone knows about it. There is also Jean Coutu, Bombardier, and Yellow Pages, et cetera. There are some extremely well-known brands in the country. However, Canada needs one unified brand rather than fragmented brands that are used by different departments of the government, different departments of the federal government, and, in many instances, different provincial governments that have their own variation of the brand name "Canada."
There is a psychological concept involved here. When people buy a product from another country; when people invite investors from another country, it is not just apples that they are buying from Canada. They are buying a whole range of other things, including the image that is elicited, namely, this conglomeration of information that comes to your mind when you hear the word "Canada."
With Canada, there is confusion in terms of what Canada represents. People have different images that come to their mind. It is a fuzzy image, not a distinct or clear image. People think about all sorts of things, like, as I said earlier, winters, the Mounties, and stereotypical portrayals, but they do not think of Canada as a green technology country that has a lot to offer in technology, education, and so on. There is brand name confusion there.
The Deputy Chair: I am on the side of Senator Finley on this question. The education issue is important. We do not have time to discuss it, but I did not quite follow that response.
Senator Downe: A number of weeks ago, this committee heard from a minister of the government of India, who talked about the education bill. I was intrigued by his remarks. I went back and did some research on it. I am not sure why a Canadian university would want to set up in India, because the bill, which has passed cabinet but has not passed parliament, requires that the Canadian educational institute pay 51 per cent of the cost of setting up the institute in India. However, under the bill they are not allowed to take any profits that they may make out of India.
Why would a Canadian university or college be interested in that arrangement?
Mr. Kindra: I am not aware of the details of that bill. Some of my friends in India work at different institutes of management or IITs. My understanding is that there are already a number of institutions from Australia and England that are expressing a desire to set up shop in India. I am not aware that there are those kinds of limitations being imposed in the bill, but I think that by the time it becomes law, the bill will be much more reasonable.
Senator Downe: In the India press that I have read when I was doing the research, there was a lot of anticipation and hope that Oxford, Harvard, and others, would set up campuses there. However, many people found the restrictions that I spoke about a moment ago too much to overcome.
There is a host of restrictions in addition to the ones that I mentioned. For example, the majority of the teaching staff must be from India. There is a concern that that will take away from other educational institutions in India. These will be private universities, where the majority, if not all the universities in India, are now government owned. They are concerned it would be a drain.
Obviously, you are not aware of the substance of the bill. Given those conditions, I cannot imagine any Canadian educational institution investing where they cannot withdraw any money that they may make after they have to put up 51 per cent. There is no return at all on investment. If they enter into consulting business on the side, then they can take some of those profits outside the country.
Other senators have questions, but I wanted to get that on the record.
The Deputy Chair: I am from downtown Toronto. On the business of students, when I was the member of Parliament for the University of Toronto area, we had a huge number of foreign students, which I thought was very positive. However, there are always complaints when you have foreign students. This happens in England, France and anywhere in the world. Nevertheless, we gained enormously from that, many people would say.
[Translation]
Senator Fortin-Duplessis: Professor Kindra, thank you for this most interesting submission. We live in a highly integrated world. The global economic growth per annum is five time higher than Canada's. This means that there are many business opportunities for Canadians. However, there is also a lot of competition and challenges. We must find a way to get past the model that we have been applying — bilateral trade and bilateral investment — to adapt to a world economy where the supply chains are changing constantly.
I have taken note of your main recommendations: develop teaching and export education, develop a Canada brand strategy, do business in the second-tier towns of India, be careful about intellectual property and also, remember that it is difficult to use the law in India in case of legal problems. Other than that, is there anything that the Canadian government can do to promote the globalization of Canadian companies?
[English]
Mr. Kindra: In addition to those four recommendations, it would be helpful if the provincial governments and the federal government worked more in concert with each other. They could benefit, for example, from the available expertise at DFAIT's offices in Ottawa and in India to focus more on creating partnerships with Indian companies and with educational institutions in Ottawa and in India.
Over the years, I have found that DFAIT has an excellent resource in a group of people with the expertise and knowledge about markets. However, their expertise in terms of the second-tier cities of India is fairly limited. The kind of interaction and expertise they can provide, although useful, is limited in certain respects. More training and growth within DFAIT would be useful.
[Translation]
Senator Fortin-Duplessis: Thank you very much.
[English]
Senator Smith: Much of this has been covered but I am intrigued that your focus is on education and having arrangements with educational facilities in India. You referred to second-tier cities. Do you have examples of such cities?
Mr. Kindra: Second-tier cities would include my hometown, where I was born, Dehradun, as well as Bhopal, Indore and Meerut. There are a number of other places in the central part of India that are uncomfortable to visit. They have provincial governments that are "difficult to deal with."
Senator Smith: There are many private schools in Dehradun.
Mr. Kindra: Yes.
Senator Smith: It almost reminds me of missionary work in the old days, whereby various churches would set up schools in such places. I was at one south of Madras in January, where a plaque said that when the tsunami hit, it wrecked everything along the coast except where St. Thomas had set foot some 2,000 years ago. The area around the church had not been touched. I thought that was kind of cute.
I can understand that Canadian universities would see the benefits to having foreign students. What is the benefit to them in going to India, given the cost arrangements that we hear about, unless there is a two-way quid pro quo? Is that what you envision? Is the University of Ottawa thinking about such an arrangement?
Mr. Kindra: That two-way street approach to trade, quid quo pro, in my opinion, is a must. Given the savvy of the political leadership in India, I am sure they understand that if you are going to trade, it has to be beneficial to both countries, not just India.
I am a little surprised because I was not aware of all the restrictions that we have heard about in this pending legislation. I would have thought it would be more balanced. I assumed that it was balanced. I was unable to learn the details.
Certainly, educational institutions have no need or desire to go where they are not able to bring back profits to Canada. They would not want to be involved in such a situation.
Senator Smith: It occurred to me that if the University of Ottawa is thinking of something, maybe there is something in Pondicherry. It was a French colony, and there are still some vestiges of the Franco-community, although they are fading. Maybe that is a far-fetched idea, but it is unique.
The Deputy Chair: On behalf of the committee, I thank you very much for a most interesting brief and for taking the time to appear before the committee.
[Translation]
Senator Fortin-Duplessis: Honourable senators, you have all received an invitation to the speech His Excellency Felipe Calderón Hinojosa, President of the United Mexican States, will give on Thursday, May 27, 2010, at 10 o'clock, in the House of Commons.
Our committee meeting starts at 10:30, and perhaps we should be allowed some time to get there. I am sure that we all wish to hear what the president has to tell us.
The Deputy Chair: When is this happening?
Senator Fortin-Duplessis: On May 27 at 10 o'clock, in the House of Commons.
The Deputy Chair: I see, yes.
Senator Fortin-Duplessis: It would be interesting.
[English]
The Deputy Chair: I am sorry but I do not see it.
Senator Fortin-Duplessis: We sit at 10:30 a.m.
[Translation]
The Deputy Chair: I will talk to Senators Andreychuk and Finley at the meeting of the Subcommittee on Agenda and Procedure. I was not aware of it.
[English]
I did not know. We will arrange things so that everyone can attend.
(The committee adjourned.)