In an uncertain global business environment, India has been proactively engaging with the world for new economic opportunities. This is an opportune moment to deepen engagement with two long-time collaborators and close partners—Italy and France—with whom India shares historical ties and many mutual interests.
Both Italy and France are among India’s top trading partners, with India’s total trade recording around $25 billion during April-January of FY 2022–23. There is a large Indian diaspora in both countries and the presence of Italian and French companies in India has been historically strong. France is the eleventh-largest foreign investor in India while Italy is India’s seventeenth-largest contributor in terms of direct investments.
India’s relationship has intensified with the two European Union members, with frequent exchanges and visits at the highest levels and constant collaborations across diverse sectors. With India and the EU progressing on the proposed Free Trade Agreement (FTA), the two large economies of the region will play an important role in future economic engagement with India.
Prime Minister Narendra Modi visited Italy for the G20 Summit in October 2021, while the most recent visit from Italy to India was of Italian Prime Minister Giorgia Meloni in March 2023. During Meloni’s visit, the India-Italy relationship was upgraded to a ‘Strategic Partnership’. India’s relationship with France expanded further with the signing of 14 governmental and 14 business agreements during President Emmanuel Macron’s visit in 2018.
Taking these robust exchanges to the business domain, two delegations of Indian CEOs accompanied the Union Minister of Commerce and Industry Piyush Goyal during his visit to France and Italy in April. Some critical areas of cooperation came up during the visit, which can strengthen the India-France and India-Italy partnerships further:
One, defence has been a critical pillar in the India-France Strategic Partnership for many years. France has been a key supplier of military hardware such as the Rafale and Dassault aircraft and has supported India in the development of missile systems. There is great potential for enhancing collaboration in areas such as naval systems, unmanned systems and cybersecurity. Likewise, India can take forward its defence cooperation with Italy and greatly benefit from the latter’s strong expertise in air defence, communication, surface/submarine naval systems, etc. The two can also enhance cooperation in co-production and design of military equipment.
Two, green infrastructure is an important area of cooperation. France and Italy can share best practices and expertise in planning and implementing green infrastructure projects. India’s renewable energy mission has made it the fourth-largest renewable energy market and the two European partners can collaborate in the green hydrogen mission, solar module manufacturing and energy efficiency, along with co-creation of green infrastructure projects. India is witnessing rapid urbanisation and has discussed cooperation in the area of green cities with both countries separately. Italy and France can provide valuable expertise and technical assistance to India in this regard.
Third is the potential in digital industries. The Strategic Partnership Agreement between India and France, signed in 2018, included cooperation in AI, quantum computing and cybersecurity. Given India’s robust digital initiatives and France’s expertise in AI, the two can enhance cooperation in this area to provide global solutions for global problems. Cooperation can also be strengthened in establishing joint technology projects and promoting the growth of startups and MSMEs for fostering innovation. Collaboration in emerging areas such as advanced materials and nanotechnology must also be considered. India and Italy already have a strong record in IT cooperation. The two can explore greater opportunities by investing in training manpower and organising business-to-business engagements.
Four, with the Indo-Pacific becoming a critical domain of foreign policy, India has been strengthening its cooperation with like-minded partners for promoting the stability and prosperity of the region. Both Italy and France are India’s natural partners in this regard. India and France have already engaged in several initiatives to enhance cooperation in the region, including the Indian Ocean Rim Association (IORA). On the other hand, Italy’s engagement with the Indo-Pacific has increased manifold over the recent past. The two countries together with India can drive economic engagement of the EU in the Indo-Pacific as spelled out in its strategy. Integrating India into their global value chains, joint investments in third countries of the region, and trilateral projects can be considered.
Five, both France and Italy are leaders of the global luxury industry. India has one of the fastest-growing luxury markets in the world, with luxury and fashion goods such as fine dining, luxury travel, jewellery, luxury cars, etc witnessing rising demand and strong growth. India can be a key market for both the countries and can also participate in their creative industries through design and innovation centres.
India recently concluded the fourth round of negotiations with the European Union on the India-EU comprehensive FTA, which saw progress on several fronts. A well-negotiated Agreement will significantly boost trade and investments between India and the EU, and further enhance India’s economic ties with France and Italy.
Given the rapidly changing geopolitical scenario, strengthening the India-Italy and India-France partnerships holds great potential for expanding trade and investment opportunities across new frontiers. With the relevant ministers engaging strongly and businesses interacting with each other, a new pace for India’s economic relationship with Europe is being rapidly set.
This article was first published in the New Indian Express on 3rd May 2023.