gurprit kindra's testimony to the canadian senate committee on foreign affairs and internatioanl...

8/8/2019 Gurprit Kindra's Testimony to the Canadian Senate Committee on Foreign Affairs and Internatioanl Trade

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Gurprit S. Kindra Telfer School of Management May 2010

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Mr. Chairman and honourable senators, I wish to thank the Senate committee for the opportunity to appear before you today

to discuss the issue ofthe 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 animportant competitive tool - Canadas branding and marketing strategy on the world stage. My concluding remarks will bring

forth several recommendations.

Indias rapid ascendancy on the world stage is increasingly attracting attention in major trading economies across the globe.

The leading demographic indicators are common knowledge: India has a population of more than one billion, with a rapidly

increasing middle class and a voracious appetite for all the good things in life. Within 20 years, Indias middle class is expected

to increase from 5% to 40% of the total population, making India the worlds 5th

largest economy -an economic powerhouse.

Notwithstanding Indias growing demand for imports, Canadas trade with India is miniscule. As others have pointed out to the

Committee, our bilateral trade with India (imports and exports) is about 0.5 per cent of Canada's total trade. Our trade with

China, by contrast, represents about six per cent of our total trade. When compared to other countries, whose economies have

grown at a more rapid pace, Canadas trade relations with India are not well developed. This is especially the case for those

markets, like the USA, Mexico and Chile, with which Canada has free trade agreements.

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 to specific areas of opportunity - education

as an export, and Canadas shortfalls in marketing and branding itself. I will also suggest how Canada and Canadian companies

might enhance their access to markets in India.

In 1973, when I left India 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 maharaja and there was the looming threat of famine in many

regions of the country. In diplomatic and political circles, India was a source of exasperation. Commentators often cited India as

an example of democracys limitations, and financial institutions, like the World Bank and the IMF, described India as an

economic basket case.

Today, there is a sense of euphoria about everything Indian, from Bollywood films and fashion to, of course, its economy.

Indias 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 the 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 members of the Indian Diaspora where I

watched the prime minister and his cabinet colleagues roll out PowerPoint presentations and executive summaries looking

very much like CEOs and board members from the corporate world of the West.

Indeed, Indias 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, the same

way as I would discuss business or hockey in Ottawa or Toronto. The political philosophy of Dr. Manmohan Singh, the architect

of Indias economic rise, and social and economic forces of globalization have reduced the cultural impediments and economicprotectionism that have faced western firms since Indias independence from Great Britain. In this regard, under the present

government of India, the private sector has experienced unprecedented economic growth and prosperity.

The extent of foreign business activity in India today 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 that are happy doing business in India. That may

be the case for the largest global companies, but the same so-called minor irritants can be major obstacles for countries, like

Canada, whose exporters are largely small and medium-sized enterprises (SMEs). Needless to say, compared to Fortune 500

companies, our SMEs do not have the same tolerance and patience, nor the resources and expertise to cope with amyriad of

changing and demanding regulatory and administrative requirements.


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Clearly, Canada wants to become a player in the Indian marketplace, but how can we compete effectively in a market

dominated by the United States and other major trading nations in the region? How can Canada leverage our common

Commonwealth heritage and large Indo-Canadian community to enhance Canadas profile and presence in India? As others

have said, its about matching Canadian capabilities and expertise to Indian demand in particular sectors.

In the education sector, Canada has a huge competitive advantage. 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. And yet 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 2009, in his submission to this committee, 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 who is admitted to a top-

tier school, 99 students must settle for a second-rate institution. India needs partnerships with good foreign universities, he

said.

Canada has failed to take advantage of Indias shortage of world-class universities. Instead, our universities and community

colleges have 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% for 2009. While

this represents increased student enrolment in Canada good news for cash-strapped universities it is a stopgap solution to

meet 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 classrooms, inadequate research labs, digressions into language training, and declining levels of student

satisfaction have resulted.

There is a finite limit to the numbers of students that can be accommodated in Canadian institutions of higher education. Our

universities and colleges are largely subsidized through the taxes that Canadians pay, and our ability, as taxpayers, to sustain

our schools is being tested by student enrolment levels. On the other hand, the demand for higher education services,

delivered in India, can be more easily met by leveraging the infrastructure of local Indian partners. Such partnership

arrangements have the real potential to alleviate the overwhelming capacity pressures that currently face many of ouruniversities and colleges in Canada.

According to the Indian government, India will achieve significant economic and social benefits from allowing foreign

universities to set up their campuses in India. These include saving India up to $7.5 billion of foreign exchange annually that

students spend on studying abroad. As well, by offering western education in India, fewer Indians students are expected to

choose a foreign education. This will reduce the brain drain as a large number of Indian students studying abroad opt to work

overseas rather than return home after graduation. According to The Associated Chambers of Commerce and Industry of India

(ACCII), several foreign universities have plans to enter India, especially, in cities like New Delhi, Hyderabad, Chennai,

Chandigarh, Pune and Mumbai.

I would like to draw to the Committees attention to an important and timely regulatory reform that will open the door to

Canadian institutions of higher education wishing to deliver educational services in India. On March 15 of this year, Indias

Union Cabinet approved a Foreign Educational Institution (Regulation of Entry and Operation) Bill, to allow foreign education

providers to set up campuses in India. Cabinet approval has paved the way for the Bill to be introduced in Parliament.

The heads of Indian IITs and IIMs reacted positively to the move. Prof Gautam Baruah, director IIT Guwahati, was quoted in the

media as saying that he welcomed the move and harboured no apprehension about the entry of foreign institutions into India.

Dr. Devi Singh, Director of IIM, Lucknow an old friend and former professor at McGill University, called it a good move. Delhi

University Vice Chancellor Prof Deepak Pental expressed similar sentiments, adding that there was nothing to worry about the

entry of foreign institutions into India.

These widely respected and prestigious educational institutions welcome competition and recognize the potential mutual

benefit that Indian and foreign institutions can expect to achieve under the new law.


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Are Canadian universities and colleges poised to take advantage of lower market entry restrictions should this bill become law?

Some Canadian business schools, like the Richard Ivey School of Business at the University of Western Ontario, have begun to

build important strategic relationships with leading Indian business schools that will help to raise Canadas profile in the Indianbusiness community.

For example, in November 2009, Ivey entered into a partnership with the Indian School of Business (ISB) to set up a Centre for

Case Development in Hyderabad. It is expected that the partnership will foster similar initiatives that will improve teaching

business in India as well as Canadians awareness and understanding of business challenges in India.

It is encouraging to see Ivey entering into a partnership to export education in a true sense. Partnering with an Indian

institution minimizes risk, while enabling a Canadian institution to take advantage of its competitive advantage without putting

at risk its infrastructure and quality of education at home. Collaboration and networking are important determinants of export

success.

Since 2009, York has offered its Schulich MBA programme in India in collaboration with the S.P. Jain Institute of Management

and Research in Mumbai. Currently, Canadian and American universities and colleges run 26 collaborative projects in India withlocal universities and colleges.

According to recent press reports, Canadian colleges such as Sheridan, Pickering and Quest are also eager to forge ties with

India through collaboration and campuses.

Since 2008, my school, the Telfer School of Management at the University of Ottawa, has partnered with the Indo-Canada

Ottawa Business Chamber (ICOBC) to host an annual forum for Canadian companies interested in doing business in India. The

event involves senior business and government leaders from Canada and India and is designed to help Canadian companies

better understand how to capitalize on opportunities in the rapidly evolving Indian market. Building on the success of this

forum, Telfer launched an Executive Learning program on how to do business in India. This certificate program was rolled out in

2009 and involves a series of workshops addressing the key factors in penetrating the Indian market, a business trip to the

market, and the development of an India Business Plan by each participant for his/her firm.

Many more initiatives and programs related to India will surely evolve for Telfer and many other Canadian educational

institutions. We need to place priority on developing and implementing initiatives that will foster and promote continued

engagement with Indian institutions of higher education, and by extension, their respective local business partners. Co-

operation in the education sector can lead to significant and broad-based returns for both Canada and India. It can be an

effective catalyst for enhanced collaboration in many commercial areas.

The building of new universities, colleges and schools amounts to a construction boom in India, and partnerships are sorely

needed. India is looking to Canada for teachers, professors, and administrators. My colleagues at Canadian universities and

community colleges are receiving telephone calls from India, inviting them to move to India to teach and/or operate new

institutions of higher education.

We need to do what many Australian and British institutions have done - export higher education to India rather than importIndian students. We are export-oriented, so why not export our expertise?

Unfortunately, Canadians have been slow to respond to opportunities in India, and as a result, Canada continues to remain

largely on the sidelines. Consider the following: the head of Indias Construction Industry Development Council, recently told

me about how he was unable to bring Canadian community colleges to India to provide much needed training in the

construction trades. His win-win partnership proposal would have trained Indian construction workers, under Canadian

standards and with Canadian construction equipment, thus alleviating labour shortages in parts of Canada as well as India.

Furthermore, his proposal would have provided Canadian businesses venturing into India with the competitive advantage of

being able to hire Canadian trained and certified Indian workers. The venture would have provided an excellent opportunity to

introduce Canada-made construction equipment to Indian firms. According to him, this endeavour never got off the ground

because of provincial certification barriers.


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In December 2009, Ontarios Premier Dalton McGuinty led the Ontario India trade mission to India to drum up business for

Ontario exporters, including four universities University of Western Ontario, University of Toronto, Queens and University of

Waterloo. No community colleges participated on the mission. The universities objective was either to attract foreign

students or to develop collaborative research initiatives. These are the traditional business objectives of Canadian universities.

Had the provincial government and the universities done their homework to better understand the changing regulatory

environment of the Indian marketplace for educational services, then Mr. McGuinty could have used the mission as a timely

opportunity to engage Indian leaders in discussions that would have promoted exports of higher educational services to

students in India. Also, more timely market intelligence from our diplomats in Delhi could have resulted in Ontario universities

and colleges using the trade mission to better position themselves in the Indian market prior to the coming into force of new

regulatory reforms that would allow for the establishment of foreign institutions of higher education.

This example of Ontarios trade mission to India demonstrates the need for Canadian and provincial government officials to

work together to ensure that a more strategic and forward-looking approach be taken in the future to promote Canadian trade

and investment interests in those sectors of the Indian economy where market access to foreigners is being enhanced. As

mentioned, several Canadian universities already have working partnerships with well-established and influential Indian

education institutions that have the ear of their national and regional governments. Our federal and provincial governments,

working with the Department of Foreign Affairs in Ottawa and in India, should be proactively leveraging these partnerships to

promote Canadian education exports as well as their many associated trade benefits for both countries.

Besides satisfying the educational needs of Indian students, exporting education services has many potential indirect trade

benefits for Canadian suppliers of other goods and services. 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 there is a pool of

reliable and skilled workers in India, Canadian contractors and suppliers would be more eager to bid on infrastructure projects

in India.

The second subject that I would like to touch on today is about our shared lack of enthusiasm in branding and marketing

Canada.

In the cluttered global marketplace, a successful brand position is a companys biggest asset. The top 100 global brands are

estimated to hold equity in excess of 2 trillion dollars. The brand name Google is estimated to be worth $114 billion, followed

by IBM valued at $86 billion, Apple at $83 billion and Microsoft at $76 billion.

What is the value of the brand name Canada and how much value does the tagline made in Canada or conceived or

designed in Canada add to a companys 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? I dont know the answers to these questions

and I doubt if anyone does, but one thing is clear.

Country marketing and branding is serious business and represents a critical component of a nations ability to compete at the

global level. Many countries throughout the world have launched unified brand campaigns to promote their entity in a singular

manner. While New Zealand is 100% Pure and South Africa is the Rainbow Nation, the Indians are delivering the unified

message of Incredible India to the rest of the world.

Last year, when the Australian government launched Australias branding search, the Australian Trade Minister, Mr. Crean,

declared that his country`s brand must have a unashamedly commercial focus' to promote Australia on many different

fronts. Recent media reports indicate that Australians appear to be settling for ``Australia Unlimited'' over a close runner up

Say G'Day to the Lucky Country and a distant runner-up, So Where The Bloody Hell Are You?

Today, India is experiencing a surging demand for fresh groceries as family incomes increase and more people move to urban

centres. Indias import of fresh fruits has grown by 217 per cent from 2004-05 to 2007-08 and apples top the list. But why

are Indias burgeoning national retail grocery chains buying apples from Washington state and New Zealand, and not from

Canada? Could it be that the Spartan apple, developed in the Okanagan Valley in 1936, by Canadas Department of Agriculture,

has an identity problem that can be traced to the multiple brands under which it is currently marketed in India?


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The Spartan - a bright red, round, crisp and delicious apple - is historically a made-in-Canada apple, but it is produced in other

countries, like the USA, and exported to world markets under competing national brands. As a result, the Spartan has lost its

Canadian distinctiveness. And to make matters worse, Spartans exported from Canada are sold under competing Canada and

B.C. brands in the same local markets. Pity the confused wholesale, retail and consumer buyers in Delhi. To promote Canadianproducts, services and intellectual property in foreign markets, be it apples or green technologies, or our expertise in the

education sector, Canada and our exporters need a unified single brand image in order to compete effectively in the global

marketplace.

Unlike many countries, Canada has no system of management or careful nurturing of the Canada brand name. There is no

shared or common purpose to our brand name. Our products are great but our brand is fuzzy and unclear. I have travelled the

world and I know how very lucky we are to be living in Canada at this time. But, its a secret that others dont seem to know. In

the cluttered markets of Asia, Canada is either invisible or associated with the stereotypical: open spaces, clean water, the

Mounties and, of course, long cold winters; its never RIM or Tim or technology or Bombardier or Cirque du Soleil. We have to

openly promote Canada and Canadian resourcefulness and ingenuity, to change how others perceive us, by marketing our

attributes and strengths as a nation and as a people.

Marketing a country is not a whole lot different than marketing underarm deodorants. A consumer has a choice of more than a

100 underarm deodorants, and there are a similar number of countries to consider for tourism, investments, major conferences

and cultural events, studying or buying products and services. How do you effectively compete for the attention of other

countries, their leaders and citizens so that they have a positive perception of Canada and its products and services so that they

will be more inclined to buy Canadian?

Branding represents the psychological positioning of a country concept in the minds of the leaders and citizens of the world. A

unified, clear and crisp positioning is important. In Canada, one of the problems lies in the fact that virtually all federal

government departments have their own branding and marketing programs with their own stylized version of the maple leaf

and their own tagline on whatever they are promoting overseas. This approach is not only wasteful in terms of resources, but

also damaging to the notion of a singular, unified and clear brand image. Thus Agriculture and Agri-Food Canada (AAFC) has

their own approach to branding Canadian agri-food products, Canadian Tourism Commission does its own thing and DFAIT is

running their own Imagine Education in Canada campaign in cooperation with the Council of Ministers of Education.

Agriculture and Agri-Food Canada has excellent experience in national branding. Under the leadership of Mme. Janice

Vansickle, AAFCs team of branding professionals has developed a comprehensive Canada Brand strategy that promotes the

advantages and positively differentiates the Canadian food and agriculture sector from competitors. This initiative has

contributed to the growth in exports of Canadian agriculture, fish, and seafood products in many foreign markets, including

Russia. Foreign buyers have come to associate AAFCs Canada Brand with safe, high-quality agri-food products.

AAFCs success demonstrates that branding does work, but it also demonstrates how branding has become so department-

specific and focused that it makes a pan-departmental single national branding strategy that much more difficult to implement.

We need to develop the AAFCs kind of sustained and results oriented, brand building, but on a government-wide and multi-

sector basis that includes all endeavors Canadian. Learn and apply AAFCs best practices to a national Canada Brand for

everyone.

For many years, I have delivered marketing and branding seminars to Canadian bureaucrats where I frequently ask why they

have so many variations of Canada brand? They acknowledge that they know that the approach is inappropriate, but they

point to departmental accountability and the fact that they retain full control over their own version of the brand. Most are

of the view that a national Canada brand is a national initiative that transcends any single department and is the exclusive

responsibility of the Prime Minister.

Currently, there are so many variations of the stylized maple leaf and so many mixed messages about Canada that one wonders

if any message is getting through at all. Its like herding stray cats. Branding should be managed using Johnson and Johnsons

family branding as a model: one single brand position carefully cultivated and managed by the leader of the country: the chief

brand manager.


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In the 1970s, Canada was probably best known and recognized under the great brand manager former PM Pierre Elliott

Trudeau. Through his international celebrity, he brought Canada to the top of the mind ladder. Today, to occupy the mind

space of the global marketplace, Canada desperately needs a common national brand to represent our exports, tourism,

education, culture, sports and philosophy as a nation in one voice to the world. This is a government-wide task that is bestled by the Clerk of the Privy Council Office.

My third point today applies to trade in any sector higher education, agri-food or other and it is about how choosing an

appropriate location contributes to success in business. While big business trolls the vast metropolises of Delhi, Mumbai,

Bangalore and Hyderabad, they ignore the second- and third-tier regional cities of India. There are substantial business

opportunities in small cities like Dehradun (my birthplace), Bhopal, Indore, Meerut and many others. Part of the problem is

that, while westerners are at ease in the Intercontinental hotels and familiar business culture of Mumbai and Delhi, many are

reluctant to venture into smaller cities and deal with local provincial governments. When small and mid-sized Indian companies

look to invest in Canada, they are more likely to be seen in small town Canada than Toronto, Montreal, Vancouver or Ottawa.

In 2007, for example, Indias Essar Group acquired Algoma Steel in Sault Ste. Marie, Ontario and Aditya Birla Group set up two

pulp and paper mills in small towns in New Brunswick.

As India modernizes its infrastructure across the country, travelling times and distances from major transportation hubs to

important secondary regional markets will be reduced significantly, opening new markets for Canadian goods and services. This

is especially the case for Canadian agricultural products. Today, rather than later, Canadian firms should be entering into

partnerships with local firms that have well-established distribution and sales networks to serve these markets. As we have

seen, the speed of economic development and modernization is rapid in India and Canadian firms would be wise to pick up the

pace and not repeat the mistakes of the past. Partner strategically and do not delay!

And my final point today is a cautionary one, concerning Indias legal system. Although the Indias economic boom makes a

compelling case for increased Canadian foreign investment and trade, the Indian legal system is notorious for its s low pace of

justice. Indian laws and regulations protect investments and uphold agreements, but dispute resolution is fraught with barriers.

Before leaping into investments, partnerships or contracts, Canadian businesses should thoroughly assess enforcement

procedures, clarify jurisdictions and study remedial outcomes.

I am learning my lesson the hard way. Three years ago, with the view to spending part of my retirement years in India, I

invested in a luxury condominium project in one of the satellite cities of New Delhi. The project never took off and, in spite of

a written and legally binding contract; I am now advised by my lawyer in India to try to recover whatever I can from the builder.

It is worth noting that the entity involved is a large construction company that frequently partners with foreign builders and

bids on infrastructure projects in India.

I understand that Canada and India are close to signing the Canada-India Foreign Investment Promotion and Protection

Agreement (FIPA). This is an important initiative for Canadian businesses. But, many Indo-Canadians living in Canada would

benefit from a clarification of Competition Bureaus policy on unfair and deceptive sales pitches originating from India. Had an

enforceable FIPA been in place at the time that I made my investment, my investment in India might be protected today. I am

not alone. There are many other Canadians who find themselves in my situation and would benefit from a speedy ratification of

a FIPA between Canada and India.

And my last comments, which also relate to my own investment, concern the vulnerability of Canadian consumers and

investors to misleading online advertisements emanating from outside of Canada. In my case, I acted in good faith upon

representations made by a prominent Indian developer on their web page, hosted in India. My case represents a growing

challenge for international trade and commerce between India and Canada how to enforce competition laws for online

misleading advertisements? It is encouraging and positive to have improved market access to the Indian market, but what

protections and remedies and consumer safeguards are in place when corrupt online business practices arise?

The Competition Bureau of Canada is a member of the International Consumer Protection and Enforcement Network (ICPEN),

which is a network of more than 40 government organizations involved in the enforcement of trade practice laws and other

consumer protection activities. Some of its national members include the UKs Office of Fair Trading; the USAs Federal Trade


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Commission, and Australias Australian Competition and Consumer Commission. Consumers, from member nations, who

believe they have been a victim of deceptive practices on the Internet can register their complaint at ICPEN's website.

On March 15, 2008, Sheridan Scott, Canadas former Commissioner of Competition, in a speech delivered in Delhi, in hiscapacity as the Chair of the International Competition Network Steering Group, welcomed the engagement of Indias

Competition Commission in the ICPEN. To be the best of my knowledge, more than two years later, India has not joined the

ICPEN. In contrast, China is an ICPEN member, therefore, leading one to ask: why is India not a member?

Given that more than one half of the worlds software developers work in India and e-commerce has taken on such global

dimensions both in Canada and India, it is paramount that Canada and its major trading partner-nations link ratification of

future bilateral trade agreements, be they FIPAs or free trade agreements, to increased enforcement of online trade practices

by Indian authorities. As a first step, Canada should formally encourage India to join the ICPEN to counterbalance the risk that

comes from a more open trading relationship. This is a position that Canada should advocate among other trading partners as

well.

As you can see from my presentation, I am a firm believer in the power of local partnerships as a means of entering the Indian

market, but there must be the real threat of enforceable oversight with credible penalties to restrain online advertisers from

overstating or stretching the truth, especially, for representations made to foreign audiences, be they exporters, investors or

consumers. Without effective enforcement, there can be no effective protection; and without confidence and trust there can

be no business relationship.

As Canada moves forward to define our future trade and investment relationship with India, we must never lose sight of our

need to balance foreign market assess with our need for adequate safeguards to protect our exporters, investors and

consumers.

Recommendations

To conclude, Canada should export education to India rather than import Indian students to Canadian universities and

community colleges. This will not only reduce the stress on Canadas educational infrastructure, thus improving the quality of

education at home, but it would open the doors to a world of endless networking opportunities for our educational

entrepreneurs. This is bound to have a synergistic effect across other industries.

Two, Canada should follow the example of many other countries throughout the world and create a unified, single Canada

brand identity. This effort should be led by the Clerk of the Privy Council at the direction of the Prime Minister.

Three, Canadian businesses should venture into tier-two cities in India where competition is less intense and opportunities in

certain sectors like education are more plentiful.

And four, although Canadian businesses are excited by the prospects of trade and investment opportunities in India, they

should always exercise due diligence when choosing local business partners; and, for its part, the Government of Canada should

work diligently with like-minded trading nations to ensure that adequate protections are in place.

Thank you, Senators, for the opportunity to share my views and recommendations with you today.

Gurprit S. Kindra, Ph.D.

Telfer School of Management, University of Ottawa


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gurprit kindra's testimony to the canadian senate committee on foreign affairs and internatioanl...

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