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RUEAIIA/CIA WASHINGTON DC
RHMFIUU/CDR USPACOM HONOLULU HI
RUEHRC/USDA FAS WASHDC PRIORITY
RUEHCI/AMCONSUL KOLKATA 1730
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 1301

UNCLAS KOLKATA 000054 
 
SIPDIS 
 
SENSITIVE, DEPT. PASS USTR 
SIPDIS 
 
C O R R E C T E D  C O P Y (ADDING CAPTION) 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EAGR EFIN EIND IT IN
SUBJECT: ITALIAN PM PRODI LEADS LARGEST EVER TRADE MISSION TO 
KOLKATA 
 
¶1.  (SBU) Summary.  February 11-12, Italian Prime Minister 
Romano Prodi visited Kolkata with over 300 business 
representatives, Italian Commerce Minister Emma Bonino and other 
senior government officials as part of a "global strategy to 
open new markets in Asia."  The delegation consisted mostly of 
Small and Medium Enterprises (SMEs) because, as Commerce 
Minister Bonino noted, they constitute almost 90 percent of 
Italy's economy.  The Italian businesses met with 
representatives of over 360 local Indian companies, conducting 
more than 2,000 individual meetings.  The delegation focused on 
agro-business, marketing of products for leather manufacture, 
jewelry, furniture and textiles.  These businesses were also 
backed by senior officials from the Associazione Bancaria 
Italiana (ABI), which is providing Euro 2.6 billion in financing 
for Italian SME exports and joint ventures, and by 
Confindustria, the Association of Italian Industries.  In 
Prodi's remarks at Calcutta University, where he received an 
honorary doctorate in science and at a seminar hosted by the 
Federation of Indian Chambers of Commerce and Industry (FICCI), 
the Italian PM outlined a broad vision of Italy capitalizing on 
being part of the European Union (EU) -- a market larger than 
the U. S. -- to develop commerce with India and Asia.  Bringing 
the largest international business delegation ever to visit 
Kolkata, with the key financiers needed to close deals, was a 
strong indication of Prodi's apparent seriousness in 
implementing his vision of more Indo-Italian trade as part of a 
greater EU engagement with Asia.  End Summary. 
 
 
 
¶2.  (SBU) Italian Commerce Minister Bonino described the 
presence of the largest business delegation ever to Kolkata as a 
"global strategy to open new markets in Asia."  As a result of 
its presence in the EU, Italy now sees Europe as a domestic 
market and wants to expand to emerging markets in Asia.  The 
Italian government and businesses, many of them SMEs, see 
potential to develop markets especially in India.  As Bonino 
noted, India's middle class is five times that of Italy's entire 
population.  Kolkata and East India offer opportunities because 
of the number of existing commercial relations, such as in 
agro-business, leather, jewelry, furniture and textiles.  The 
over 300 Italian business people met with representatives of 360 
local Indian companies, conducting more than 2,000 individual 
business meets.  Given the strong commercial potential, the 
Italian government was planning to open a new commercial office 
in Kolkata by the end of 2007. 
 
 
 
¶3.  (U) In the agro-business sector, eight MOUs will be signed 
during the delegations visit to India, which includes also 
Mumbai and New Delhi.  Kolkata was a key destination as West 
Bengal is a major agricultural producer, leading in rice 
production and vegetables, and also is a major producer in the 
fisheries sector.  Representatives from the Parma food cluster 
shared their experiences to facilitate setting up food clusters 
in West Bengal and Italian consultant Octagon will conduct a 
market survey of food processing in West Bengal to be completed 
by June 2007. 
 
 
 
¶4.  (SBU) Bonino noted Italy also wanted to sell equipment for 
the leather sector as West Bengal is a major leather producer 
and has a great demand for modern leather production equipment. 
The recently established 1100-acre Calcutta Leather Complex 
(CLC) is a Special Economic Zone (SEZ) for leather and allied 
industries.  CLC has a total tanning capacity of 1,000 tons 
using 30 million liters of water a day.  It has a 
state-of-the-art central effluent treatment plant.  According to 
the Directorate-General of Commercial Intelligence and 
leather good.  Of this, 25 percent is processed in West Bengal. 
Kolkata also accounts for 55 percent of India's domestic 
production.  In addition, the Italian government will assist in 
setting up a design and leatherwork training facilities at the 
CLC. 
 
 
 
¶5.  (U) Jewelry also offers significant opportunities. 
According to the Indian Gem and Jewelry Export Promotion 
Council, India exported USD 16.8 billion worth of jewelry in 
¶2005.  West Bengal exported USD 260 million and of that USD 195 
was produced and exported from Manikanchan, established in 2003 
as India's first jewelry SEZ.  Again, Manikanchan presents 
opportunity for Italian companies to export equipment and 
expertise, especially in the area of modern jewelry designs and 
low-carat jewelry items.  Bonino commented that closer 
commercial links to the Indian companies would present 
opportunities to offshore production for greater efficiencies 
and competitiveness for Italian businesses. 
 
 
 
¶6.  (U) The Italian businesses will be supported by financing 
from the Associanzione Bancaria Italiana (ABI).  According to 
ABI General Manager Giuseppe Zadra, ABI has arranged Euro 2.6 
billion in financial instruments guaranteed by the Italian 
national insurance scheme to finance the SME's up to Euro 200 
million for business ventures in India.  Societ` Italiana per le 
Imprese all'Estero (SIMEST), the development finance institution 
dedicated to supporting and promoting the activities of Italian 
companies abroad, will also provide funds to the SMEs through a 
Euro 300 million "Go India Fund."  In addition, President of the 
Council of Small Industries of Confindustria Guiseppe Morandini 
said that his organization would assist the small businesses in 
overcoming the government red tape, both Italian and Indian. 
 
 
 
¶7.  (SBU) During his remarks on receiving an honorary doctorate 
from Calcutta University and at the "Indo-Italian Synergy: 
Destination West Bengal" business seminar, Prodi emphasized that 
Italy's engagement with India was part of a broader EU context. 
While Calcutta University Chancellor and West Bengal Governor 
Gopal Krishna Gandhi, grandson of Mahatma Gandhi, spoke grandly 
of India's natural affinity for the great history and culture of 
Italy, Prodi rather spoke of the rising dominance of the EU. 
Prodi noted that with the recent addition of Romania and 
Bulgaria to the EU, its population was close to half a billion 
-- a far larger market than the U.S.  The Euro was also a strong 
and increasingly dominant international currency, one which 
China and India were now holding in addition to the U.S. dollar. 
 Prodi also emphasized the EU's commitment to principles of 
human rights, tolerance, democracy and peace -- principles 
shared with India.  Prodi saw Italy as being the bridge for the 
EU with Asia.  He commented that shipments from Asia could 
arrive in Italy within five days, a much shorter period than 
required for reaching ports in Northern Europe. 
 
¶8.  (SBU) Comment:  While much was made of historic Indo-Italian 
amity, with frequent references to Italian travelers like Marco 
Polo and Niccolao Manucci, rhetoric aside, the Italian visit to 
Kolkata appeared to generate tangible results for some of the 
businesses that participated.  Bonino and others focused on the 
gains for Italy in developing commerce with India, whereas Prodi 
spoke more of the EU's potential as a trade partner, possibly 
reflecting his past as the President of the European Commission. 
EU that would be the most important trading partner for India. 
Evident in the tone and direction of Prodi's comments was his 
position that the EU was a greater potential market and, with 
the increasing importance of the Euro, a more important 
financial partner than other potential suitors, such as the 
U.S., China or Russia. 
JARDINE