Indo-French Economic Relations
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Over the past few years, there has been a significant increase in exchange of high level visits between India and France and a long-term partnership is taking shape between the two countries.[br]
Over the past few years, there has been a significant increase in exchange of high level visits between India and France and a long-term partnership is taking shape between the two countries.[br]
Over the past few years, there has been a significant increase in exchange of high level visits between India and France and a long-term partnership is taking shape between the two countries.[br]
Over the past few years, there has been a significant increase in exchange of high level visits between India and France and a long-term partnership is taking shape between the two countries.[br]
Both countries are actively engaged in providing impetus to the economic relations by identifying various areas where untapped complementarities hold forth the promise of further growth. France and India have instituted agreements to provide protection to bilateral investment from each other, and also to avoid double taxation. Apart from meetings of the high-level Joint Economic Commission (the 12th Session of which was held on 4th November, 2003 in Paris), which provides guidance for the overall economic relationship, sector-specific consultations take place at regular intervals between the two governments to facilitate cooperation in areas like Energy, Telecommunications, IT, Mining, Roads, Urban Development, and Agriculture. In addition, there are increasingly active interactions between the Commerce and Industry Associations of the two countries and between individual companies.
Table of Contents
TRADE
France in India
France is India’s 5th largest trading partner in the EU (after the UK, Belgium, Germany and Italy). The European Union is the second most important destination of India’s exports and France accounts for 2.05 % in it. France’s share in India’s imports was 1.3% in 2004-05.
India’s exports to France increased from USD 1119.03 mln in 2003-04 (April-Feb) to USD 1443.06 mln in 2004-05(April-Feb), making a growth of 28.96 in one year. India’s imports from France were USD 988.11 mln in 2003-04 million (April-Feb) and USD 1237.03 mln in the same period in the last fiscal representing an increase of 25.19%.
French exports to India include electrical equipment, organic chemical products, aeronautical & space construction products, mechanical equipment, general & special usage machines, and pharmaceutical products. Indian exports to France consist of both a)traditional items such as garments, leather, textiles, raw cotton and yarn, and marine products, and b) non-traditional items such as automotive components, electronic and rubber components, chemicals and dye-stuffs, pharmaceuticals, granite, and consumer durables are showing promising growth.[br]
India in France
On the other hand, India’s presence in France is far from being significant. India doesn’t emerge in the list of top 10 investing countries in France. Indian exports of software services to France are still at a low level. Therefore, a huge potential market remains open for the Indian software industry. Tata Consultancy Services (TCS) has a partnership with a French company in France, WIPRO is opening its own representative office in Paris, Sankhya Infotech has a commercial office in Toulouse, Satyam Infoway is also looking for business opportunities in France and new Indian companies like Netkraft Private Ltd. or Technova Information Systems are gaining a preliminary foothold in the French market.
Also, the Indo French trade has remained modest in size from France’s point of view and the agriculture sector is no exception. In 2002 France has exported only 70 million Euros worth of Agricultural Commodities & Processed Food to India. On the other hand, Indian exports to France during the same period touched 210 million Euros.
INVESTMENT
France is the 7th largest investor in India with total FDI amounting to Rs 2822 crore (August 1991 to November 2004). However, in comparison to other European countries, its share is less. Netherlands, UK and Germany have brought in more FDI inflows in India. Key sectors of interest to France include power, hydrocarbons (petroleum and petroleum products), telecommunications, auto parts, agro-industries, drugs and pharmaceuticals and environment.
The French companies’ presence is nevertheless diversified. Nevertheless, the French presence (investment & trade) appears, in view of our available expertise, undoubtedly weak in comparison to the potentials and needs of the Indian market. The image of India’s technologies and know-how in the food-processing sector needs to be stressed further.
A number of exercises have been recently conducted by France to present and promote India’a national offer in partnership with ADEPTA, SOPEXA and UBIFRANCE. French manufacturers have participated in major trade fairs conducted in India.
Many French companies have gained a footing in the Indian IT market. France is also a potential market targeted by Indian software companies. And in the Telecom sector, France has a strong representation through investments made by French majors Alcatel in Gurgaon, Bangalore and Chennai, and France Telecom in Mumbai through a partnership with BPL Mobile and Sema Group, which is now part of Schlumberger Group and has its own subsidiary in Calcutta for telecom software development.
In multimedia industry, the world leader Thomson Multimedia has opened a subsidiary in Chennai and has a significant market share in tubes for the Colour TV industry in India through exports coming from its industrial production sites in Europe and China.
In mines, the cooperation between India and France is one of the most longstanding one and active within the bilateral cooperation. Indeed, a dedicated Working Group on Mineral Exploration and Development has been created under the Indo-French Economic Joint Commission more than 17 years ago. This cooperation has been very fruitful and has enabled the two countries to develop several successful geological and mining.
France has also invested in India’s infrastructure primarily in roads and railways. In the road sector, France appears to have a pioneering experience in India with the widening of the road network to 4-lane (60 km pathway between Delhi and Jaipur) executed by the big French company GTME in 1997. Several French companies have a strong presence in India in this sector. The French expertise in railways has been recognised in India in the early 70’s with the governmental company SNCF; from late 90’s, some French companies are active on the domestic market, either through international tenders (COGIFER, GEISMAR, CORYS TESS etc.) or through local setting ups such as French big companies ALSTOM, ALCATEL (which has longstanding presence in India. One should note the high participation of French companies to the Delhi Metro project e-Transaction group (smart card ticketing ),(signalling and control & security system),(engineering on electrification and maintenance systems, designing of line n°3 and also consulting services for Calcutta and Mumbai metro), (tracks switching systems), (electrification, railway maintenance equipment.
The consumer goods sector in India has experienced a significant evolution over the past few years. Several factors have initiated this boom – the opening of the Indian economy and removal of trade barriers, the change in the Indian consumer’s taste for products of quality and the increase in the purchasing power as well as the evolving living standards of Indian homes. The Indian market has, therefore, witnessed the entry of several foreign brands in the consumer goods sector. France, being particularly synonymous with creativity, luxury and fashion, has a significant presence in India in this sector and a vast number of French brands are today available in the Indian market.
The French presence in this sector covers a diverse range of activities such as perfumes & cosmetics, tableware & home decoration products as well as fashion accessories. Brands such as Verrerie Cristallerie d’Arques, Baccarat, Lalique and Daum, which are ranked amongst the top crystal ware companies in the world, today adorn Indian homes. A large number of world-famous perfume & cosmetic brands such as L’Oréal, Clarins, Vichy, Christian Dior, Nina Ricci etc. are also available in the Indian market. As for the fashion accessories sector, ST Dupont, Cartier and more recently, Louis Vuitton, are already very popular with the Indian consumer. Gotier, a leading French furniture name is also establishing its presence in the Indian market.
ECONOMIC AID
Apart from trade and investment, there are a number of instruments of economic dependency of India on France. Among them include, French bilateral assistance to India. The Financial Protocol is the chief instrument of such assistance though there are others such as the CFME action, the Industrial Co-operation programme with the Ministry of Industry, Support Fund for Enterprises and the Joint Indo-French Centre for Applied research.
