Asking the European businessmen to shed their old image of India, External Affairs Minister Yashwant Sinha on Friday said things have changed here and it is "now a happening place," opening bright prospects for a partnership with a "new India."

"Things have changed. Things have to change further," Sinha told the fourth India-European Union Business Summit in New Delhi, stressing "if you are smart," advantage could be taken of the immense opportunities that exist.

The minister's remarks came after the European Commissioner for External Relations Chris Patten observed that India "retains the reputation of a hard country in which to do business."

Patten said, "Excessive red-tape, poor infrastructure and rigid labour laws are the constraints most commonly cited by the EU business" while contending that though Indian import tariffs have substantially decreased following the economic reforms programme, "they are still high by international standards."

Sinha said: "We are looking at a partnership between a new Europe and a new India" while observing that New Delhi looked at EU not merely as a group of nations but as one of the largest markets of the world.

Sinha felt there was a need to give historical ties a new, modern and dynamic content.

He said India and the EU shared a common outlook of the world. "We need to work harder on economic and trade fronts," he emphasised.

In a message, Italian Prime Minister and European Council President Silvio Berlusconi, who called off his visit to India following gastrointestinal problem, said the India-EU summit was a "new decisive step forward in relations between India and Europe."

Observing that India is a sub-continent of "enormous weight and importance," he said it "attracts attention with its renewed economic growth which is amongst the highest in the world especially in the field of information technology."

"All this makes India a primary partner for the EU both politically and economically. In this perspective, new horizons are ahead of us in the relations between the European Union and India, which will benefit from increased and diversified forms of cooperation for the achievement of mutual benefits and the furthering of peace and security in the world," he said.

President of European Commission Romano Prodi said in another message that more than ever, "together we should face global challenges like international terrorism, environment protection and respect for democracy and human rights, where India carries significant influence in Asia and beyond."

Noting that India's image in Europe was changing towards a "dynamic trailblazer in the knowledge-based economy," Prodi said, "We invite India to work with us to develop a vision" of how the two sides can bring together entrepreneurs, investors and enable them to prosper from systems of fair competition and exchange and from stable, predictable and transparent governance.

Sinha said both sides hope to achieve bilateral trade target of 35 billion euros by 2005 from the current level of 25 billion euros, and 50 billion euros by 2008. "It is a challenge which can be met," he said.

On concerns over high tariffs, he said, "We are on a glide path to ensure a soft landing and not a crash landing" as and when these rates are reduced.

He noted that after the Marakesh World Trade Organisation round, India had to remove quantitative restrictions, forcing the industry here to adjust to them.

Touching on giant strides made by India, he said in agriculture both production and productivity have shot up, rapid advances made in science and technology and the country has emerged as one of the largest platforms for research and development with over 30 multinationals having their bases here.

He said India is also one of the largest suppliers of skilled manpower to the rest of the world.

On the issue of business process outsourcing, he said the world has recognised that India was "cheaper and better. Nobody is doing business here with a sense of charity."

Stressing that the reform process must continue and accelerate, Patten said there was need to reform the tax system to provide for a more even distribution of the burden of essential public spending.

He felt the "chronic discrepancy between revenue and expenditure crowds out private sector investment and drives up interest rates. This discourages FDI."

Patten said "these are exciting times in India, and in the EU's relations with it. Our determination to boost trade and investment is stronger than ever before."

EU's share in India's FDI approvals during 1991-2002 was around 25 per cent. Officials said investment approvals from EU have risen from 78 million euros in 1991 to 2314 million euros in 2001.

During this period, actual FDI from EU were to the tune of four billion euros, which is 14 per cent of total FDI inflows into India of 30 billion euros.