India and Europe have enjoyed significant historical ties, bonded by trade and movement of people across the centuries. Since India gained Independence in 1947, it has forged close links with all European nations and looks to strengthen its trade and investment ties with the region further. The two sides share commitment to democracy, rule of law, and open economies, and enjoy strong institutions and legal frameworks.
For Indian industry, Europe has been a preferred market and investment destination, particularly the larger economies of the continent. The current scenario of shared global challenges and also its own robust growth journey urges India to seek a wider economic engagement that spans more countries of the region as well as more dimensions of interaction. A closer connect between European and Indian businesses would bring together two of the largest economies of the world and provide new opportunities for tapping markets and driving investments, thereby leading to faster growth of both sides.
Given this backdrop, CII has brought out the report “India-Europe: Catalyzing Cooperation” which analyses the dimensions of current trade and investment relations between India and the European economies, identifies high potential exports from India to key European economies, highlights areas of potential cooperation and provides suggestions for catalyzing the India Europe Partnership further.
India’s Trade Profile
India’s exports increased from US$ 292 billion in 2020-21 to around US$ 422 billion in 2021-22. As of 2021-22, its two largest markets are North America and EU, accounting for around 20% and more than 15% of India’s total export basket respectively. North America and EU are closely followed by the Northeast Asian countries at the third place, with a share of around 12%.
In the EU, Netherlands (US$ 12.54 billion), Belgium (US$ 10.08 billion) and Germany (US$ 9.88 billion) are India’s biggest export markets with shares of 2.97%, 2.39% and 2.34% respectively.
India Europe Trade
Total trade between India and the 42 countries of Europe studied in the CII report stood at US$ 281 billion in 2012-13 which fell to US$ 235.27 in 2020-21, owing to the disruptions caused by Covid-19 to international trade.
However, with economies recovering, the regions experienced a revival in trade, which stood at US$ 333.41 billion in 2021-22. Between 2017-18 and 2021-22, trade between the two regions grew at a compound annual growth rate (CAGR) of 4.5%.
Indian exports to Europe have increased significantly over the last decade. In 2012-13, total Indian exports to Europe stood at around US$ 108 billion. Post the pandemic, Indian exports to Europe have significantly increased to US$ 163.5 billion in 2021-22, recording a CAGR of 4.7%.
Over time, Indian imports from Europe have significantly fluctuated. In 2012-13, Indian imports from Europe stood at US$ 173 billion and reached US$ 156.31 billion in 2019-20. Post the pandemic, Indian imports have been rising again and stood at around US$ 170 billion in 2021-22.
India’s Top Exports to Europe
The top products exported by India to Europe are in the broad HS 2-digit level categories of mineral fuels and oils (HS 27); iron and steel (HS 72); organic chemicals (HS 29); machinery and mechanical appliances (HS 84) and electrical machinery and equipment (HS 85). Mineral fuels and oils was India’s top export to Europe and recorded an export value of US$ 7.33 billion in 2021.
Other top exports from India to Europe were in the categories of gems and jewellery (HS 71); pharmaceutical products (HS 30) articles of iron and steel (HS 73), among others.
India’s Top Imports from Europe
On the import side, India’s top imported item from Europe belonged to the broad HS 2-digit category of gems and jewellery (HS 71) in 2021 and recorded a value of US$ 35.68 billion.
Other top imports from India featured in the categories of machinery and mechanical appliances (HS 84); mineral fuels and oils (HS 27); electrical machinery and equipment (HS 85); optical, photographic and medical equipment (HS 90), among others.
The Future of India Europe Cooperation
The relationship of the two sides has now matured to go beyond trade and investment to include areas of global interest, such as climate change and sustainability, technology advance, energy, education and healthcare. Growing economic relations between the two will encompass these issues, which will influence trade and investment patterns, create new supply chains, and incorporate new models of doing business. With a strong existing understanding and mutual interest, India and European nations can leverage these emerging issues together for new solutions to global challenges and for seizing arising opportunities with mutual cooperation.
To know more, read the CII report on “India Europe: Catalyzing Cooperation”.