Close trade ties with France and Italy will promote Indian exports

Source: The post is based on the article “Close trade ties with France and Italy will promote Indian exports” published in the Livemint on 13th April 2023.

Syllabus: GS – 2: Effect of policies and politics of developed and developing countries on India’s interests.

Relevance: About India’s ties with Italy and France.

News: The Union minister of commerce and industry is on a visit to Italy and France. 

About India’s trade relations with Italy and France

Bilateral merchandise trade between India and Italy was $13.23 billion in 2021-22, while the India-France bilateral trade in goods (excluding military equipment) was at $12.42 billion.

Top exports from India to Italy: Iron and steel, products made of these, aluminium and its products, petroleum products and cotton ready-made garments.

Top exports from India to France: Petroleum products, electric machinery and equipment, drug formulations, cotton ready-made garments (including accessories) and aircraft, spacecraft and parts.

Trade in Goods and Services: India had a positive trade balance in goods with both these European countries. India’s services exports to the two markets include telecommunication services, IT and IT-enabled services, business services and transport services.

What are the areas of cooperation in India-Italy relations?

Over 130 Italian companies are either present in India or sourcing from here, or have partnerships with Indian companies. Well-known Italian companies that have invested in India include Fiat Auto, Heinz Italia, Piaggio, etc. They have invested in sectors such as automobiles, trading, services, machinery and food processing.

India-Italy Strategic Partnership on Energy Transition: It was launched in 2021. The partnership provides opportunities for further exploration of joint investments.

What are the areas of cooperation in India-France relations?

France is the 11th largest foreign investor in India. This is spread across sectors such as services, cement and gypsum products, air transport, petroleum and natural gas. Notable French companies present in India include Airbus Group, BNP Paribas, etc.

Defence ties are a core component of the Indo-French strategic partnership. India has recently allowed foreign direct investment in the defence sector.

What are the potential opportunities in India’s ties with Italy and France?

a) Italian and French companies are trying to build resilient supply chains and are looking at the large and growing Indian market, b) India’s export baskets can be diversified in goods and services further, c) All three countries can collaborate in areas like research and development, technology-based services such as health-tech and edutech, and the startup and audio-visual sectors, d) India can be a low-cost post-production hub for Italian and French audio-visual companies, e) India’s large and growing market provides opportunities for manufacturers from Italy and France to explore and test-market their products, f) India’s strengths in organic production and traditional medicine and practices like Yoga and Ayurveda can be showcased to Italian and French consumers.

The other areas include 1) India’s focus on organic food and millet is aligned with the EU’s focus on a sustainable food system, 2) Identification of skill requirements in the EU and joint skill development and language training programmes with France and Italy could help Indian professionals and skilled workers access the EU market.

What India should be done?

The support of Italy and France is essential in concluding a broad-based, balanced, and comprehensive trade agreement with the EU. Hence, India should work closely with both Italy and France.

India-EU trade agreement will further boost trade and investment flows, encourage B2B collaborations, help diversify and secure supply chains, provide a stable operating environment for businesses, and create employment in both markets.