India's principal exports to Poland consists of commodities such as tea, coffee, poultry and dairy products, unmanufactured tobacco, spices, vegetables, processed food, drugs, pharmaceuticals etc. Main fields of possible cooperation include: information technology, light and heavy engineering, chemical industry, civil aviation, projects in infrastructure as well as joint ventures in almost all branches of industry.

They key role of the IPCCI is to promote business interests of its members through :

• Disseminating relevant information to its members on facilitation of import-export, joint ventures, mergers, company profiles, business updates, bilateral trade enquiries and in any other form that may help members develop and strengthen business ties with Poland.

• Organizing training activities and workshops for simpler and faster trade facilitation.

• Leading as well as receiving delegations to and from Poland for trade fairs, business development opportunities and information exchange.

All companies presently conducting or interested in fostering trade relations with counterparts in Poland. Activities of IPCCI would include assistance in the following sectors: manufacturing, trading, service sector, exchange of information and technological and human resources.

POLAND'S NEW ECONOMY

Poland is a medium-sized European country situated by the Baltic Sea, and is spread across 3,12,685 square kilometers. The country, situated in the center of Europe, is bounded by Germany, Czech Republic, Slovakia, Ukrain, Belarus, Lithuania and Russia.
The population of Poland is about 3,86,44,000, which is 0.7 percent of world population. In terms of population, Poland stands 9th in Europe and 26th in the world. The capital of Poland is Warsaw (1.6 million citizens). Other big cities include Krakow, Lodz, Katowice, Gdansk, Wroclaw and Poznan.

The Polish economy has shown rapid progress in the past one decade (from the 1990s) and today stands out as one of the most successful and open transition economies. The privatization and liberalization of small and medium state-owned companies and the establishment of new firms marked the rapid development of a private sector which is now responsible for 70 percent of the Polish economic activity.

Rapid growth in gross domestic product since 1992 has also increased Poland's stature in the world economy (from 0.3 percent in 1990 to 0.65 percent in 2002). Poland's rapid development began over a decade ago in the 1990s. Between 1995 and 2000, the average annual growth of global GDP was 3.1 percent, while in Poland it touched 5.5 percent. Throughout the past decade, Poland has shown an upward trend in its GDP.

In 1990, GDP was pegged at $59 billion (at current prices), in the year 2002, GDP reached a record high of $184.1 billion averaging a growth rate of 1.3 percent. However, over the past few years, unemployment in Poland has increased, and as per 2002 statitics, stands at 17.3 percent.

Observing the progressive development of the country, the latest OECD report opens up with the following statement regarding Poland, "Ten years after launching an ambitious programme of economic transformation, Poland is seen in many respects as one of the most successful economies in Central and Eastern Europe. Unlike other countries, Poland has not encountered a mid-course depression, its currency has not been subject to speculative attacks, and the economy has slowed down only modernity in the aftermath of the Russian crisis. The success of Poland's economic transformation comes from well orchestrated combination of sound financial policies and perseverance with structural reforms." But the road so far has been by no means easy, and has been arduous and risky. Poland has had its ups and downs. On the trade front, Poland has been doing exceptionally well; in the last one-decade, Poland's foreign trade has grown more than two-and-a-half times, with imports and exports averaging 6 percent and 5 percent growth, respectively (World Trade Organisation data).

Today, the country is considered to have an edge in transformation and accounts for almost a quarter of overall international trade of Central and Eastern Europe. Ten of the top European Union member countries are among the leading trading partners of Poland; of which Germany is at the top of the ladder followed by Italy and France.

Trade has spearheaded the country's integration with the European Union which is currently the main priority of Poland and is affecting most aspects of its economic policies. However, Poland's outsized current account deficit and restrained inflation also have equal precedence.

Due to its strategic location in the heard of Europe, Poland has taken the leading position in foreign direct investment. The country attracted $60 billion FDI between 1989 and 2002. As an indispensable element of political transformation, privatization constitute an instrument of Poland's long term economic policy. It provides a basis for acceleration of economic development, restructuring and modernization of the economy. The present economic environment in Poland is now in sync with its accession to the EU in 2004.

Economic
The Cabinet adopted the 2004 Central Government Budget Draft on the assumption that the deficit will not exceed USD 11.03 billion. One of the most important modifications in the draft budget was the downward revision of the assumption of annual average inflation to 2% from 2.2% which implies higher real growth of the deficit. Despite this revision, the budget revenue target has not been revised downloads. The Government also set the economic growth assumption at 5% as compared to 3.5% in this year's budget. Inflation is expected to be restrained by high unemployment, which is assumed at 17.8% at the end of 2004. Apart from the 2004 budget draft, the government also adopted its medium term strategy for public finances, designed to prevent fast rising public debt, curb budget deficits and adopt the Euro in 2008.

The general business climate indicated in the processing industry fell to seven points in September from ten points in August, according to the Central Statistical Officer (GUS) . Economic growth in the first half of the year stood at 3% and the Deputy Prime Minister Hausner is convinced that economic growth would surpass 3.5% by the end of 2003. GUS also reported that industrial output rose by 5.8% over the previous year and that 16 out of 29 industry sectors reported increased output in August. Consumer prices fell for the third consecutive month in August , bringing the annual inflation rate to 0.7% over the previous year. According to the Deputy Prime Minister, the unemployment is expected to stop rising this year and stand at 1.7% by the end of 2004.

After Poland becomes a full-fledged a full-fledged EU member, it is expected to seek membership of the Eurozone. The country could join the Eurozone in 2007-2008 at the earliest as it is required to be a member of ERM II for at lest two years before being able to adopt the Euro. The Central Bank wants Poland to adopt the Euro in 2007 itself.

The latest issue of the International Monetary Fund's Report on world Economy estimates the growth of Poland's GDP of 2.9% this year and 4.1% in 2004. IMF has pointed out that increasing investment and exports as well as controllable inflation rate would be the basis for the healthy economic growth. IMF's report also recommends that in order to limit the deficit Poland should introduce reforms of public finances and also advised that the privatization process should be accelerated.

b. Policy changes by the host government, pronouncements regarding aid/credit facilities, etc. by the local government, trade agreement and information on trade delegations:

The Polish and Czech presidents have confirmed the identical stands taken by the two countries on European issues. While discussing the European Union Constitutional Treaty , both Presidents called for more consultations before the conclusion of the Inter-Governmental Conference on the final version of the constitutional Treaty.

Poland rejects the idea of a European Security System operating outside NATO . According to Polish foreign Minister while attending the UN General Assembly's Annual Ministerial Debate, the Council of Ministers adopted an amendment to the personal income tax bill according to which the self -employed would be able to pay 19% income tax from next year.

Poland had reduced Angola's 153 million US Dollar debt by 60% and has rescheduled the rest of debt to be repaid in installment by October 2006. This was announced after the official talks between the Polish and Angola's Presidents during the latter's official visit to Poland.

Prime Minister Miller and the Croatian Prime Minister held a meeting in Croatia during which the Polish Prime Minister supported Croatia's bid to join EU and NATO.

The Lower House of Parliament, Sejm, in a near unanimous vote (354-1) passed an extradition Agreement between Poland and India. Under and India will extradite each-others citizens who are sought in connection with legal violations in their respective countries.

The Prime Minister Miller along with his counterparts in Lithuania, Latvia, Estonia and Finland signed a joint statement on cooperation in implementing infrastructure power projects as well as in rail and road transport.

The Polish Government adopted a medium-term financial strategy to meet fiscal convergence criteria by 2007. The Deputy PM Housner clarified that this strategy envisages gradual lowering of the budget deficit from next year's ZI. 45.5 billion to ZI.28 billion or 2.6% of GDP in 2007.

Economic growth is expected to be 5% in 2004 and 5.6% in 2005. Seven billion Zlotys will be raised from privatisation in the next two years and unemployment rate brought down to 15.1% in 2006. This was adopted by the Government in its mid-terms public finances strategy. All three strategies are dependent upon the pace of economic growth. The final traget is to attain GDP of 5.8% in 2005 and 6.8% in 2006.

Poland and Spain have set-up three working groups to develop the infrastructure in Poland after Minister level talks between the two countries. The first group will share Spai's experience in using EU structural funds. The second will share Spain's experience in using EU structural funds. The second will deal with licenses and transport and participation of private capital in infrastructure. The third-working group will exchange experience in EU transport policies.

Poland and China have signed three letters of intent relating to future bilateral economic cooperation during an economic seminar in Canton. In 2002 bilateral trade turnover was around USD 2.3 billion with Polish side facing a trade deficit of USD 1.8 billion.

e) Analysis of global imports and exports (source-wise and destination -wise), of the country concerned vis-à-vis India's share particularly, for commodities of export and import interest to India:

INFORMATION RELATING TO TRADE AND INVESTMENTS BETWEEN THE HOST COUNTRY AND THIRD COUNTRIES HAVING A BEWARING ON INDIAN ECONOMY:

According to an A. K. Kearney's latest poll, Poland has moved up to 4th position in the world list of 2003 of best places for direct foreign investments. China is the most attractive FDI destination in the world followed by USA and Mexico. Poland has also attained the status of the most attractive destination in Europe. Poland's improved ratings are attributed primarily to progressing reforms and its approaching membership in the European Union. Poland is assessed on par with India with regard to ratings and better education of Polish employees even though labour is much more expensive. As regards assessment of investment risk, Poland enjoys the most favourable perception among all emerging markets with 44% of investors considering Poland a small-risk country. In comparison, 5% of investors consider Brazil as a small risk country while 12% express a similar opinion about India. One of the key factors attracting investors is the size of the local market and its potential for growth, making it the most attractive in Europe. Another major advantage of Poland is that its GDP has been growing at a relatively fast rate while some EU economics have slowed down.

Deputy Economy Minister Szejna has predicted that Foreign Direct Investment in 2003 would remain at last year's level of around US Dollars 6 billion. According to the Minister, direct investment was at US Dollars 1.5 billion in the first quarter of 2003. In 2002, a total of US Dollars 6.06 billion was invested in Poland against USD 7.1 billion in 2001. From 1990 till 2002, Foreign Direct Investment has totaled USD 65.11 billion. The Minister was of the opinion despite the recent decline in FDI, it would still be termed as successful considering the fact that a 20% decline in foreign investment world-wide has been noticed.

It has been a rapid growth in the order placed with Polish arms industry manufacturing companies by foreign countries. The Deputy Treasury Minister Szarawarski hopes that very soon foreign orders would exceed USD 1 billion. Until 2001, the annual weapons export from Poland was worth around USD 50 million. The most important buyers of Polish military equipments are India, Malaysia and Indonesia besides countries in North Africa, Egypt middle-east countries as well as NATO countries.

The state-controlled PHZ Bumar hopes to sign two contracts for army equipment delivery worth USD 500m yet in 2003. Earlier this year, Bumar had signed three contracts worth a total of USD 600m for defence supplies to India and Malaysia. Bumar is the leader of a defence group including 17 defence ministry companies. It was created during consolidation process of defence ministry launched in mid-2002, aiming to establish two groups --one under Bumar's leadership, while the other one, is to be led by the State agency for Industrial Development.

After Poland joins the EU, it is expected that Japanese investors would become more confident while investing in Poland. Mutual economic turnover totals 1.1 billion US Dollars with Japan being Poland's 21st largest economic partner.

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NATO is planning to invest around USD 500 million in Poland under the NATO Security Investment Programme. 115 Polish companies are in the scheme after winning tenders. A Defence Ministry Spokesman said that the programme would cover security facilities required by the NATO Defence System.

Fegardala, a Swedish producer of technical foam for the automotive industry purchased a 90 percent stake in the automotive component maker Izo-Blok for Eur2m. It specialises in manufacturing shock absorbers and car upholstery.

PRIVATISATION AND RESTRUCTURING PROGRAMME OF THE HOIST COUNTRY:

The Treasury Ministry has declared its intention to speed up the privatisation process and plans to sell directly to investors 60 state owned companies in 2004. In addition, 100 companies will undergo indirect privatisation. The Ministry estimates that next year's revenue from direct privatisation would be around PLN 250 million (USD62.5 million).

The Treasury Ministry and the LMN Group have initialed an agreement on the sale of Polish Steel Mills, Polskie Hutystali (PHS). Negotiating teams have initialed a draft sale agreement, which will be examined by an inter-governmental team for PHS privatisation. The LMN Steel Corporation has also shown interest in participating in the privatisation of Jastrzebaka Spolka Weglowa (JSW), as steel production requires coke in sufficient quantities which could be supplied by JSW. LMN has eventually offered Zl. 6 billion for the take over of PHS. This also involves a 2 billion Zloty deal with the holdings largest creditors including state railways, state owned gas and the industrial development agency. Other debts which LMN is expected to pay off is Zl. 3.4 billion.

A new holding to emerge from a merger of three drug producers will offer 30% of its shares to Warsaw Stock Exchange next year. According to figures made available by the Polish Association of Drug Producers, Poland imported medicines worth US$ 1780 million while exported drugs worth US$ 191 million.

Celsa Polska has signed an initial agreement on the purchase of Huta Ostrowiec SA steel mill. The company, a subsidiary of the Spanish Celsa Group offered the highest price for the plant - 53.1 million zlotys (13.5 million USD) and investment plans reaching 380 million zlotys.

1) Indo-Polish Bilateral Trade Figures

According to latest statistics released by Central Statistical Office (GUS) , the exports from India to Poland for the period January -July 2003 amounted to US$ 131.51 million, registering an increase of 25.73% over the same period last year. The exports to India from Poland amounted to US$ 38.39 million during the same period showing an increase of 126.03% over the corresponding period in the previous year.

International Trade Fairs, particularly, participation by Indian companies:

Indian Trade Promotion Organization (ITPO) coordinated the participation of five Indian companies in the Poznan Fashion Week. Most of the items on display were textiles and jewellery . According to the ITPO representative several trade enquiries were received by the participating companies. Ambassador was received by the President of the Poznan Trade Fair Authority who appreciated Indian businessmen's participation in their various trade fairs.