Prepared as a backgrounder for the EU-India Partenariat, (a meeting between small and medium industries of the EU and India) to be held in New Delhi in March 1999, the paper states that the European industry's growth rate has been moving upward and is expected to reach five per cent in 1998.

The rate of growth was stagnating at between three and four per cent per year since the early eighties right through the nineties. It went up to four per cent in 1997. The cost-cutting effort is likely to focus on labour costs. The paper states that the labour component of the entire cost of production in chemicals industry in Europe is around 20 per cent, leaving out the labour components of raw materials. Withcheap labour on its side, Indian industry can cash in on the situation to access global markets through the EU.

The pharmaceuticals industry in EU countries commands a 23-per cent share of the industry as a percentage of turnover. According to the paper this segment is hardly growing and has been stagnant for some years. Organic chemicals command a 15 per cent share in the industry. Detergents, soaps, cosmetics and perfumes have another 13 per cent while the plastics and synthetic rubber segment has a 13 per cent share also.

The recent growth in the EU chemicals industry has been led by the exports growth to countries outside of the EU. Exports have gone to the USA, Asia, Latin American countries and the central European and east European countries.

It is estimated that imports by the EU chemicals industry will be worth more than 18 billion ECU (Rs 71,000 crore) in 1998. Of that goods worth around Rs 13,000 crore will come from countries outside of the EU.

The paper has quoted data available from theEurostats, to say that around 61 per cent of the chemical industry enterprises within the EU, belong to the micro sector, employing less than 10 people each. Around 37 per cent are small and medium sized enterprises and and only 2 per cent are large enterprises employing more than 500 people. The large enterprises account for 60 per cent of the employment and 56 per cent of the turnover, while the small and medium sector account for 36 per cent both in employment and turnover terms.

The Partenariat, to be held next year has been organised with the objective of promoting strategic alliances between Indian and EU companies in the small and medium sector and the stress will be on one-to-one meetings.