India-EU FTA could encourage Hungarian players to invest in India

As the European Union (EU) grapples with Brexit, reports suggest some other countries, including Hungary, may be the next to follow the UK’s example. In an interview with Banikinkar Pattanayak, Hungarian foreign affairs and trade minister Peter Szijjarto says Brexit shows the EU must change fundamentally, and pushing the UK to notify its intention to leave the EU at the earliest is a mistake. Edited excerpts:

Does Brexit reveal fault lines of the European Union?

The Brexit has clearly shown that the EU must change fundamentally. The individual state should be given much more authority. Brexit has shown that Brussels (which hosts key EU institutions) is too much about bureaucracy. We (Hungary) talk about much less bureaucracy and much more competitiveness. We say the role of national parliaments should be strengthened. Unfortunately, some European institutions see Brexit as a necessity for further or deeper integration (so Brussels will have more authority), which we don’t agree with.

Who is a loser in Brexit: the UK or the EU?

Both. Because the UK is the secondlargest economy in the EU. So it’s a loss politically and economically. There are hundreds of thousands of Europeans working in the UK. So, now the question is what kind of regulations will apply to them. Some EU officials have asked the UK to expedite its exit process. How do you see it? Pushing the UK to notify its intention to leave the EU quickly is a mistake on part of the EU. We should start negotiations about the UK’s exit only after the European Council makes the decision on what kind of a mandate will be given to the European Commission to negotiate (with the UK on its exit). Because, as a central European country, we have a very strong political interest there, as our people are working in the UK and it is a major trade partner.

What is the biggest lesson for Europe from Brexit?

The most important conclusion is if you run European politics against the will of the people, it will have such a serious consequence. So, European institutions must not run policies against the will of the people. For instance, the migration crisis hit the continent very hard, with hundreds of thousands of people entering the European territory. And the EU institutions carried out a totally hyprocritical policy, criticising those member-states who tried to protect their borders. Now, Europe is struggling with huge security challenges. We never had the kind of terror threat in Europe as we have now. The EU didn’t let a member-state take its own sovereign decision as to whom they want to allow into their territory and whom they don’t. That’s why we have filed a lawsuit against this policy (on immigration). The EU bureaucracy is totally working against the will of the people, just like an ivory tower. Despite close diplomatic relations, India-Hungary trade was less than $600 million in 2015-16. Which are the areas where you are seeking or offering greater market access to boost trade? We speak about both trade and investments. We would like to increase our trade from $600 million. We have identified four areas for growth in investments and growth: automobiles, pharmaceuticals, weather management and renewable energy. Around 31.5% of our overall industrial output comes from the auto industry. So it’s a major area and so is pharmaceuticals. We have sophisticated technology on weather management and how to minimise weather-related losses. Also, although Hungary puts a lot of emphasis on nuclear energy, we have some companies with very developed technology in the renewable energy sector as well. So, we would like to work in these areas.

What about Indian investments in Hungary?

Greenfield investments have been carried out by Indian companies in Hungary — Apollo Tyres in 2014 and Samvardhana Motherson in 2015. Last year, six Indian companies invested more than $600 million in Hungary. Last year, most investments to Hungary came from India, which shows big Indian companies look at Hungary to decrease logistic costs and for skilled labour as they become more and more successful in the European market. The foreign direct investments in India from Hungary stood at a paltry $18 million since 2000. In recent months, India has further liberalised over a dozen sectors ranging from aviation and defence to pharmaceuticals. Do you see greater scope for Hungarian investments in India now? We have a presence in the pharmaceutical space in India, which we would like to enhance. We are waiting for the free trade agreement between the EU and India because it also deals with the protection of investments. While big companies have enough muscle to be brave enough to invest anywhere, for the size of companies that we have, they need every kind of guarantees to be brave enough to invest in faraway countries.