Kanchi Batra, Business Editor, The Diplomatist conducted a written interview with H.E. Mr. Jean Claude Kugener, Ambassador of the Grand Duchy of Luxembourg to India on issues including the current COVID-19 situation, common interests of Luxembourg and India in the international sphere, the future of the India-EU Free Trade Agreement and on the Luxembourg-India cooperation in the steel sector. Ambassador Kugener also gave a positive evaluation of Luxembourg’s economy and notes that the country is considered an attractive destination for Indians.
The whole world is affected by the Coronavirus. How much impact has the Coronavirus outbreak had, thus far, in your home country?
Luxembourg has also been severely affected since the confirmation of the first case of COVID-19 on 29 February. This pandemic has already caused more than 4000 confirmed positive cases and 110 deaths. The average age of the deceased people is 84 of which 66% died in hospital. Globally, Luxembourg ranked 5th in terms of positive recorded cases per 100.000 citizens. An unprecedented crisis and on 18 March, the Prime Minister declared the state of emergency and the Government has taken a number of strong measures.
Luxembourg’s Statistics Office STATEC indicated that the GDP shrank already by 6% and that the unemployment rate was 6.9% in April, a 27% increase compared to 2019. With sound public finances reaffirmed with the “AAA” rating by all major credit rating agencies, the Government adopted different measures totalling approx. 17,5% of the GDP to launch an unprecedented economic stabilisation programme. The programme includes among others immediate financial assistance to help businesses meet their liquidity needs and supporting companies in getting bank loans through state guarantees.
With its “lockdown Exit strategy”, the Government is partially lifting the national lockdown in three different phases and primary schools, restaurants, cafés and pubs have recently re-opened with the required sanitary rules and social distancing recommendations. Among the various measures, 50 free surgical masks have been distributed to every citizen, but the situation is far from normal and we do hope that the overall situation is going to improve progressively during the coming months.
What do you think will be the impact of the Coronavirus on how people travel and socialize? Can we expect life to go back to normal, at some point? And if so, what will the new normal be, in your opinion?
In my opinion, the travel and socialising habits will change and we all have to adapt with new regulations and recommendations. The post-COVID-19 period is going to be challenging as our daily life and routine are impacted by the restrictions.
Our national carrier Luxair has started flying again and is gradually resuming flights taking special measures in order to guarantee safe travels. Voluntary testing is offered at the Findel international airport. And with the re-opening of restaurants and coffee shops and now cinemas, we see a certain normalcy despite the fact that everybody needs to continue respecting the distancing rules and health safety recommendations.
The digital world is definitely going to have an increasing influence. We can see this with the home shopping / deliveries or the webinars for example; most of our meetings at the Embassy are now virtual. But I do look forward to meeting people and colleagues again as no computer interchange can replace the physical presence and discussions we are used to enjoy. Flexible working hours or remote home working will be part of the “new normal”. Alternative working definitely contributes to the social distancing measures or in reducing the traffic jams which we face everywhere nowadays. On 1 March, Luxembourg became the first country worldwide to make all public transports free in the country and together with remote working, this might have a positive effect on the reduction of the daily traffic jams.
With the lockdown we also discover new ways to communicate, follow concerts or visit an exhibition: the Luxembourg Philharmonic Orchestra has launched a nice series of virtual live stream concerts, which I very much enjoy watching. I also attended, among others, a virtual Vernissage of a new exhibition at the Villa Vauban museum in Luxembourg or followed a webinar of a Think Tank in Washington. New discoveries but I nevertheless look forward to attending the next concert, visit an exhibition or meet friends in a nice restaurant in Delhi again.
How would you comment on India’s handling of this crisis from the beginning to this date?
This pandemic has been challenging in many ways for every country affected. The Indian Government has reacted very early and we follow the situation very closely. During the entire lockdown, the Embassy remained operational with a reduced workforce in order to assist the Luxembourgers stranded in India and now the Indian citizens who live and work in the Grand Duchy in returning home. As the Consulate became last year the number one Luxembourg consulate in the world in terms of Schengen visa applications and as the Indian community in Luxembourg increased by 20,5% in comparison to 2019, the daily consular enquiries are quite considerable despite the closure of our Consulate since 22 March.
Since the beginning of this crisis, we have received full support from our various interlocutors in the Indian Government, at Union level as well as in the various regions where we assisted our citizens and companies throughout India. And in particular from our esteemed colleagues at the Ministry of External Affairs who are doing a very impressive job.
What types of initiatives are you planning to build with India when this crisis is over?
In our bilateral agenda, we had planned and already finalised the programme for official visits, which we jointly decided with the Indian Government to postpone after the COVID-19 crisis. But our daily work continues and we are regularly in contact with our Honorary Consuls in India, Nepal and Sri Lanka where the Embassy is co-accredited as well.
In January, I welcomed in New Delhi the CEO of the Luxembourg Stock Exchange as well as the Founder of the Luxembourg Green Exchange, the world’s first leading platform dedicated exclusively to sustainable financial instruments. Both addressed the “Raisina Dialogue” and we held a number of highly interesting meetings during this visit. The Luxembourg Stock Exchange is the global leader in debt securities listings and the leader in RMB bonds listings among others and cooperates since more than 2 decades with the Bombay Stock Exchange. We have ongoing discussions with our various Indian interlocutors as the Luxembourg Green Exchange has to date more than 50% of all green, social and sustainable development bonds listed worldwide.
We continue in assisting all our companies present in or working with India and are working on certain projects to be launched as soon as our daily lives have returned to some normality. I’m particularly happy that some of these companies, which contribute to the “Make in India” since decades, were able to redirect parts of their productions towards essential goods in the fight against the coronavirus.
Luxembourg and India celebrated 70 years of establishing diplomatic relations in 2018. What sort of legacy do the two countries have in terms of historic relations?
Indeed, we celebrated our 70th Anniversary of the establishment of our diplomatic relations in 2018. Historically speaking, Luxembourg and India always had very strong economic and trade relations, which led to the opening of the first Vice-Consulate of the Grand Duchy in Bombay in November 1929. On the eve of the First World War, Luxembourg ranked among the world’s six largest steel producers and this was one of the factors that contributed to the opening of the Vice-Consulate. Today, ArcelorMittal, the world’s leading steel and mining Company headquartered in Luxembourg since its merger in 2006, is further developing its presence in India.
During these decades of friendship, some important visits contributed to the strengthening of our bilateral relations. On 3-4 June 1956, the Hon’ble Vice-President of India, Dr. S. Radhakrishnan travelled for an official visit to Luxembourg meeting Prime Minister Joseph Bech in Vianden before being received in audience by H.R.H. Grand Duchess Charlotte, the grandmother of the current Grand Duke, at the Palace in Luxembourg City. From 14-21 May 1995, H.R.H. Crown Prince Henri headed an economic mission to India led by the Secretary of State for Foreign Affairs, Mr. Georges Wohlfahrt, with a large number of Luxembourgcompanies and from 14-16 September 1998, the Hon’ble President of India and Mrs. K.R. Narayanan undertook a three-day State Visit to Luxembourg.
We have been particularly honoured to welcome our Foreign and European Affairs Minister, Mr. Jean Asselborn, in New Delhi for his 4th visit from 27-29 January 2020. The Minister held fruitful discussions with his counterpart the Hon’ble Minister Dr. Jaishankar, gave a speech in cooperation with the Jean Monnet Center of Excellence and the Confederation of Young Leaders at the India International Centre and visited Raj Ghat to honour the 150th Birth Anniversary of Mahatma Gandhi as well the Amar Nath Sehgal Private Collection. Please allow me to highlight in this context as well the beautiful cultural legacy of the modernist artist Amar Nath Sehgal (1922-2007), who set up his studio in the Grand Duchy in 1979 and lived between Luxembourg and India until his return to New Delhi in 2004. His iconic bronze bust sculpture of Mahatma Gandhi in the Municipal Park in Luxembourg City is still today a beautiful link between our countries.
India and Luxembourg have longstanding cooperation in the steel sector. How could this be further enhanced in the future?
Steel has been in Luxembourg’s DNA since the discovery of iron ore deposits in the south of the country in the early 1840s, which was also the beginning of the industrialisation of the country. From the 1870s onwards, Luxembourg became part of the powerful “steel belt” formed by the border regions of the Saar, Lorraine and the region known as the Minett in the south of Luxembourg. On the eve of the First World War, Luxembourg ranked among the world’s six largest producers and in 1951, Luxembourg became one of the 6 founding members of the European Coal and Steel Community (ECSC), followed by the European Economic Community (EEC) in 1957, the precursor of today’s European Union.
As mentioned earlier, Luxembourg and India have a strong historic cooperation in steel. ArcelorMittal’s presence in India is further deepened with the recent takeover of Essar Steel. Let me highlight in this context as well the Paul Wurth Group, a leading player in the design and supply of technological solutions in the primary stage of integrated steelmaking, which is active in India since 27 years and has worked with many Indian steel producers overs the last decades. Among many other projects, Paul Wurth has provided the design and technology for the Bhilai steel plant in Chhattisgarh, which has one of the largest blast furnaces in India. Another company, Traxys is very active on the commodities and the iron ore market and works with the main Indian steel producers. I am therefore very confident that steel will always play a big part in the bilateral relations between both our countries.
Do you plan on creating synergies between Luxembourg and India in the IT sector?
India has undoubtedly one of the most dynamic IT sectors in the world and I am proud to say that it is also one of our main areas of cooperation. Luxembourg is among the top 3 leading financial centers of the Eurozone and the 2nd largest Investment Fund center in the world, which needs a lot of IT support and banking software. Many Indian companies have set up their offices in the Grand Duchy from where they often also cover their European operations. To name but a few, Tata Consultancy Services, Wipro, Tech Mahindra, Infosys, Syncordis, Damco Solutions and Quantum Business Advisory have their offices in Luxembourg and have been expanding over the last years. I see this also with the great number of Schengen visas that our Consulate issues every day to Indians working in the IT sector, many of whom visit the EU for the first time while travelling to Luxembourg.
There is definitely scope to expand our cooperation in the IT sector, but also other connected sectors like space as our Government launched its SpaceResource initiativein 2016 and the Luxembourg Space Agencyin 2018. The Luxembourg company “Société Européenne de Satellites” (SES), the world leader in operational satellites, has partnered with ISRO for many years and is currently operating 5 satellites over India.
Luxembourg has a growing ecosystem for Start-ups and especially Fintech companies, which offers a lot of potential to young Indian techies that want to expand their operations in the EU. We have a range of incubators like the Luxembourg House of Fintech (LHoFT), which brings together financial institutions, Fintech innovators, research, academia and public authorities, to help drive forward the development of products which meet specific industry needs. Besides the LHoFT, let me mention another incubator, the Technoport, which was established as far back as 1998. The Technoport has participated twice in the Europe-India Innovation Partnership programme, which has brought together incubators from the EU and India in Bengaluru, Bhubaneshwar and Delhi. In addition to hosting facilities, Luxembourg also offers a wide range of support services for young entrepreneurs, including those provided by Luxinnovation, the national agency for innovation, and the House of Startups (HoST) located in Luxembourg-City.
What are the common interests of Luxembourg and India in the international sphere?
Both our countries have been working together as partners in multilateral fora for many decades with shared values on democracy, the international rule of law and the desire to secure a culture of peace, understanding and non-violence. As a mediator and active founding member of the United Nations, it is no coincidence that the Luxembourg Government offered the sculpture “Non-Violence” or “The Knotted Gun” by Carl Fredrik Reuterswärd to the United Nations in 1988. Not only the diplomats walk past the sculpture every day and are reminded of the message of non-violence, which was also one of Mahatma Gandhi’s core beliefs and encourages them to seek peaceful resolutions to ongoing conflicts. There are many common projects where we actively work together with India like climate change, as both our countries have signed and are committed to support the Paris Agreement.
India-EU Free Trade Agreement is still under negotiation. According to you, what are the main obstacles to the conclusion of an agreement?
The European Union is India’s largest trading partner, accounting for 80 billion euros worth of trade in goods in 2019 and it is the second-largest destination for Indian exports (14%). Trade in services between the EU and India increased rapidly from 22.3 billion euros in 2015 to 29.6 billion euros in 2018. Furthermore, the EU’s share in foreign investment inflows to India more than doubled from 8% to 18% in the last decade, making the EU the first foreign investor in India. This just shows how important the trade and investment relationship between India and the EU really is.
As highlighted in the 2018 EU Strategy for India, the EU, and thereby also Luxembourg, remains committed to a balanced, comprehensive and ambitious Free Trade Agreement with India. Such an agreement must benefit both sides and we need to work together by solving our differences to make a resumption of negotiations possible. And the next virtual EU-India Summit will offer an excellent occasion to further discuss this agreement.
What do you think makes Luxembourg attractive, as an investment destination?
Allow me to first highlight that Luxembourg, as per the Indian official statistics, is the 15th Foreign Direct Investor in India. Other than PAUL WURTH, ARCELOR MITTALand TRAXYS, there is a wide range of companies that have chosen to establish production lines or their offices throughout India. CERATIZIT based in Karnataka and West Bengal provides hard cutting materials for different industries and the greater South and South East Asian markets. The Luxembourg-Indian Joint Venture AMER-SIL KETEX in West Bengal is producing highly sophisticated gauntlets for the automotive industry for South Asia. ROTAREX in Mumbai exports high performance valves, regulators and fittings for all gas applications serving its customers across various sectors including fire safety, automotive, oil and gas, energy and fertilizers in India. IEE produces car seatbelt reminders, among others, and is currently expanding its presence in Pune. TRACTEL SECALT based in Mumbai provides lifting facilities for building projects and the maintenance services for skyscrapers. Many other Luxembourgish companies export to India like HITEC, which provides carbon black products to the automotive sector, or BEJIMAC exports machines and equipment to the Indian textile industry. The traditional Luxembourgish wine producer in its 5th generation, BERNARD MASSARD, is also exporting its sparkling wines to India since 2019. BOSON ENERGY offers thermal treatment solutions that produce local clean energy from locally available fuels such as waste and biomass residue and has been selected for the Clean Ganga project. SOLAR CLEANO export its solar cleaning robots to India.
However, our investment relations go both ways. The strong presence of Luxembourgish companies in India corresponds to an expanding presence of Indian companies in my country, which I already mentioned earlier. Many Indian companies are listed on the Luxembourg Stock Exchange, which issued its first Masala bond in 2008.
Luxembourg is often seen as a European hub for setting up a company’s European headquarter, primarily because of its central location and cosmopolitan population, which speaks Luxembourgish, French, German and also English. With close to 50% of the resident population not having the Luxembourgish nationality, my country is proud to be an open society and economy, attracting as well more and more people from India, whose diaspora has more than tripled from 2015 to 2020. Today, the Indian citizens rank 14th among the foreign nationals living and working in Luxembourg compared to 27th in 2015.
Furthermore, Luxembourg’s economy is robust and diversified with expertise in many different sectors form steel, composite materials, car-component manufacturing to digital services and satellite development. The Grand Duchy draws on its political, economic and regulatory stability to foster a strong culture of investor protection, which also benefits its financial center. So, come and Visit Luxembourg!
What is the story behind Luxembourg’s National Day?
On 23 June, we celebrate the official Birthday of His Royal Highness the Grand Duke. When the grand-mother of the current sovereign, H.R.H. Grand Duchess Charlotte acceded to the throne in 1919, her birth date 23 January was the official Birthday celebration which in 1947 was proclaimed as a legal public holiday. But a grand-ducal decree in 1961, fixed the public celebrations of the head of state to 23 June. Since that date, Luxembourg’s National Day is celebrated on a 23 June irrespective of the actual day of birth of the sovereign. Due to the pandemic, this year’s National Day celebration will be limited to an official ceremony at the National Monument of Luxembourgish solidarity avoiding any larg