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Business potential for $1 trillion in Indo – EU biz corridor

India is one of the world’s largest economies, in the world, in terms of purchasing power parity. The country is the fastest-growing large economy, with annual GDP growth rates of around 7%, and on its way to reach the $7.8 trillion economy mark by 2030. It is an important player in global economic governance. In 2017, the EU was India’s first trading partner, while India was the EU’s 10th largest trading partner. For India & Europe countries, there will be even greater opportunities if all 27 countries join in India free trade to contribute sustainable development. This would create one of largest single markets – $1 trillion in spending and investment – offering great opportunities for both trade partner.

India will become the most populous country in the world, surpassing China in the next decade. It is already the world’s biggest democracy. 50% of all Indians are under the age of 25. This demographic dividend could add about two percentage points yearly to India’s per capita GDP growth over the next two decades. 67% of the population lives in rural areas, but the projected rate of urbanization is set to double in the next decade.

The global economy faces challenging times ahead. Even for a country as large as India that possesses an expansive domestic market, high growth can only be sustained with an export-oriented policy focus. The government has made huge strides in facilitating an enabling business ecosystem through liberalization of Foreign Direct Investment, ratifying WTO’s Trade Facilitation Agreement, and other such reforms, which has improved India’s integration into the global economy. To further enhance India’s export preparedness to meet the needs of the post-COVID global economy, the Export Preparedness Index (EPI) 2020 examines the export ecosystem of Indian states and union territories.

Why are relations with India important for the EU?

India is of interest to every nations in the world:

Population of 1.38 billion. With India has more than 50% of its population below the age of 25 and more than 65% below the age of 35, India has the biggest young workforce in the world;

India poised to become third-largest consumer market

Important player in Security & Counter – Terrorism;

Rate of Development;

Democratic holds them back in several fronts;

Improved support from Government to Foreign investors;

Culturally diverse.

Indo – EU Relationship – Fact Sheet

India is EU’s 10th largest trading partner.

India-EU bilateral trade in goods was €80 billion in 2019. This amount is 11.1% of India’s of total Indian trade;

The EU is the second-largest destination for Indian exports (over 14% of the total);

Trade in goods between the EU and India increased by 72% in the last decade.

Trade in services between the EU and India increased rapidly from €22.3 billion in 2015 to €29.6 billion in 2018.

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.

EU Cumulative foreign direct investment stocks in India amounted to €88.486 billion in 2019.

Some 6,000 European companies are present in India, providing directly 1.7 million jobs and indirectly 5 million jobs in a broad range of sectors.

Indian companies invested over €50 billion in Europe since 2000.

Indo – EU Export & Import Trade Statistics

The position of India among the largest trade partners of the EU in 2019 – 2020. The four largest export partners of the EU were the United States (18 %), the United Kingdom (15 %), China (9 %) and Switzerland (7 %). The four largest import partners of the EU were China (19 %), the United States (12 %), the United Kingdom (10 %) and Russia (7 %). The below image has some more details. It shows that India (€45.67 billion, 1.8 %) was the eleventh largest export partner of the EU, between Canada (€38.3 billion, 1.8 %) and Mexico (€37.6 billion, 1.8 %). In imports India (€43.99 billion, 2.0 %) was the tenth largest partner of the EU, between South Korea (€47.4 billion, 2.5 %) and Vietnam (€34.4 billion, 1.8 %).

FDI Equity Inflow

EU foreign direct investment stocks in India cumulative total amounted to €88.486 billion from January 2000 to December 2019.

Knowledge Sharing

Knowledge sharing is more necessary than ever. The time of the industrial era, with its “dull markets’, is over. Because of the rise of global, high – competition markets, organizations have to respond faster. Be more innovative. Be able to resolve more complex problems. There is a need for high – dynamic value creation and more responsive organizations. In a changing bilateral and global context, India and the EU are showing growing interest in extracting more strategic value from their partnership. In its recently adopted strategy on India, the EU recommends the negotiation of a broader Strategic Partnership Agreement to promote sustainable modernization, consolidate the rules-based global order, and address global challenges together. India, too, has become more open to creating new types of global partnerships— including with European partners—on relevant issues of sustainable development. The International Solar Alliance, co-launched by India and France, illustrates this aspect of India’s global engagement. This context provides an opportunity to advance India-EU cooperation in the area of sustainable development.

India and the EU agreed to cooperate on the implementation of the 2030 Agenda for Sustainable Development, to reinvigorate the EU–India Development Dialogue and to create synergies in their respective cooperation with other countries. Based on new issue-specific partnerships on climate change and energy, urbanization, water, and resource efficiency, India and the EU have been engaging in a process to transform their relationship as development partners. This transformation comes with a broader perspective, evolving around the shared aspirations expressed in the Sustainable Development Goals (SDGs) and going far beyond development cooperation in a narrow sense.

Challenges

India is facing significant challenges to unlock its economic and demographic potential, notably there is a need to enhance people life style; build adequate infrastructure and connectivity; ensure access to education and health across the country; and deal with increasing income inequality. With 93% of the workforce in the informal economy even new job creation is another challenge, given the 12 million people estimated to enter the workforce every year.

India is currently the world’s 4th largest emitter of greenhouse gases, although this stands for only a tenth of the US per capita CO2 emissions. Its energy needs will more than double in the next 20 years. The country is highly vulnerable to climate change and extreme weather, such as heat waves, droughts and floods. This exacerbates development challenges and affects disproportionately the poor and vulnerable groups. The impact of economic and demographic growth on the environment is high. Particular challenges include resource depletion, in particular water scarcity, air and water pollution and waste management.

India is modernizing, and has set ambitious objectives to: reduce poverty and spread the benefits of economic growth; answer to the needs of its aspiring middle-class; boost production capacity and productivity through domestic and foreign investments and transfer of technologies; achieve sustainable urbanization; modernize agriculture; digitalize the economy; improve water management and resource efficiency; develop qualified human resources; and nurture innovation and start-ups.

India occupies an important place in a complex geo-strategic space. Situated at the centre of key Europe-Asian trade routes, and a factor of stability in a complex region, India’s diplomatic and security posture towards its neighbors and major regional powers have important consequences for the EU. India’s traditional relations with developing countries are also a potential source of strength in addressing the sustainable development goals.

Prosperity through sustainable modernisation

An enhanced EU-India partnership on sustainable modernization should contribute to deepening the existing relationship and foster investment and trade, while accelerating India’s move up the value chain; its research and technological development; resource efficiency and green growth, expansion of the tax base; and fostering of entrepreneurship. India’s internal policies and priorities will have a huge impact on international action on climate change; global energy security; resource efficiency; 2030 Agenda implementation; environmental challenges; disaster risk reduction; ocean governance, including sustainable fisheries and blue economy; and the protection of global common goods. The EU should project its dynamic bilateral cooperation on modernization to the global stage, thereby engaging more actively with India on these issues to secure an effective global approach:

a) Consolidating the modernization partnership;

b) Closer coordination on global challenges;

c) Realizing the untapped potential of the trade and investment relationship;

d) Investing in talent and innovation

Security and stability through the rules-based global order

Both the EU and India strive for inclusive, effective and rules-based global governance, centered on multilateralism, with the UN at its core. The EU supports India’s greater participation in global governance and has a strong interest in building a solid partnership for global stability and prosperity. There is still significant room to improve coordination with India in the multilateral and regional fora. A better understanding of each other’s positions is essential to identify meaningful shared interests that would benefit a common approach. The EU should seek to continue to engage India on specific issues, from a result oriented perspective:

a) Promoting effective multilateralism;

b) Building on common values;

c) Reinforcing cooperation on foreign policy – from common values to common action;

d) Developing security and defense cooperation.

India and EU relationship is bound by long history. India holds the position of being the fastest expanding economy in the world. Prospective bilateral agreement and growth avenues would push trade between India and EU to $1 trillion by the upcoming year. With further liberalization of FDI policy in different segments and the advent of GST next year, FDI from EU is expected to touch a new growth trajectory. Undoubtedly, collaboration of India and EU nations in the realm of investment and business can truly transform both the partner’s entrepreneurial ecosystem. Both business partners should continuously meet and engage in discussions related to mitigating bilateral trade issues, defense ties, renewable energy, knowledge sharing and other vital areas. Going ahead, growth prospects for trade and development between India and EU countries are very promising and sustainable, not only for the coming years but for the coming decades.

H.E. Lena Deros (URGC Ambassador at Large) and Sir Chrysostomos Vassili, in collaboration and partnership with Dr. P. Sekhar are focusing upon a Indo-Hellenic collaboration, attracting India’s industries to fuse with Greek industries, in Greece and the Republic of Cyprus, so as to enable Indian industry to enter into collaboration and partnerships with Greek and Cypriot companies, whereby they can share and enhance products, manufacturing and global markets via a European base.

Indian industries are interested in focusing their investment and base within Cyprus and Greece. Cyprus sits at the cross road of three continents, Greece and Cyprus is investor friendly, business orientated with favorable tax systems in Europe, and with access to a network of double tax treaties. 

On the people front, both Greece and Cyprus are multicultural societies, offering multilingual, versatile and highly educated workforce, with the highest percentage of university graduates per capita in Europe, as such multinationals can rely upon highly qualified professional service providers and work force. Excellent infrastructure with good transportation shipping roots throughout the EU, Africa, Asia and Middle East, which allows goods to be shipped globally.

Indian companies establishing their base in Greece and Cyprus allows them to have a permanent foundation and footing within Europe, with access to three continents from a European manufacturing and servicing base.

The Indo-Hellenic collaboration is one that will start to change how India strengthens its markets to Europe and from Europe globally.


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