France is the top European destination for FDI and the 3rd host country for Indian investment projects in Europe

The Diplomatist interviewed Mr. Eric Fajole, Trade Commissioner at the Embassy of France in India. He gave an overview of the trade, including the potential areas of cooperation between France and India and explained how Indian investors can choose France as the best entry door to not only the European but also the African market.

France and India recently celebrated the 25th anniversary of the signing of the Indo-French Strategic Partnership. Are you satisfied with the present level of trade relations between the two countries? What more, according to you, needs to be done?

Yes, Indo-French economic relations are very satisfactory, particularly in 2023 as we celebrate the 25th anniversary of our strategic partnership with India. In the post-Covid era, India’s positioning is very interesting for European countries for supply chain related matters. Many French companies have already invested in India and are fully aligned with the Make in India policy, and will do more, both for the Indian market and the regional one as India is projecting itself as an alternative to China. More than 750 French companies, including almost all the forty biggest ones from the CAC40, are operating and developing their business in India, such as Capgemini, TotalEnergies, Schneider Electric, Sanofi, and Airbus – to name but a few. And in the past months, we have seen a growing interest from mid-cap companies as well in this market.
The Indian government is already successful in its policy to attract FDI in key sectors of the industry and giving its support through PLIs. The FDI inflow from France to India in FY 2020 – 21 reached a record of €3 billion with significant investments, such as ADP in GMR airports. Renault Nissan and the Stellantis group in the automotive sector made big announcements recently to increase production capacities in India, with a focus on EVs. We expect smart cities also to be key in the coming years. Indeed, France has technologies to offer to big cities to tackle various issues – pollution, traffic, energy, waste and water management, for instance.

What are the key trade exchange opportunities between France and India?

The most important sector is aerospace and defence, which accounts for over 50% of French exports to India. Many French majors in this sector have operations in India, such as Dassault, Safran, MBDA, Thales, Airbus and Naval Group. We have opportunities with regard to not only production, but also aircraft maintenance (MRO sector). Today, space has also emerged as a promising sector. We have ongoing collaborations and interesting opportunities for the French and Indian industries in this sector.
We also want to promote India as a destination for French investments in the pharmaceutical and medical sector. During the pandemic, we worked a great deal and we still continue to work on medical equipment and healthcare.
Lastly, we have very interesting mutual opportunities with French industrial equipment in various sectors: automotive, e-mobility, hydrogen and renewable energy. Just a few days ago, we participated in a trade show on plastics, and this week it’s on energy. France has a lot to offer in terms of equipment in a market that is expected to grow by 7% this year and is therefore attracting a lot of investment. We need to meet this strong demand.

What potential do you see for Indian investment in France and vice-versa?

There is a huge potential for Indian investment in France. Every year, Business France identified around 40 new investment projects from India in France. In 2022, 12 projects were converted into investments. During the pandemic period, Indian investors already active in France received the French government’s support for being able to maintain staff, business, and production in their manufacturing plants. France is the top European destination for FDI and the 3rd host country for Indian investment projects in Europe.
Indian companies have good potential in France. One such example is Tata Consultancy Services. TCS, the Indian IT giant and digital transformation leader announced the development of a new service centre in the French city of Poitiers in 2021. TCS has an excellent job creation plan with a total of 1500 employees in France.

For Indian businesses, France can be a favourable base for spreading out to the rest of the European Union. Kindly expand on this.

Thanks to France’s conducive business climate, more and more foreign companies have chosen to move their European HQ to Paris from London due to the impact of Brexit, which is reshuffling the supply chain industry as well as a financial hub for the EU market. France offers lucrative incentives with its strategic location in Europe. Indian investors should choose France as the best entry door to not only the European but also the African market.

Can you update us on the progress on the India-EU Free Trade Agreement?

This trade deal is very important for both Indian and French businesses: the EU is India’s third largest trading partner, accounting for €88 billion worth of trade in goods in 2021. In return, India is the EU’s 10th largest trading partner, accounting for 2.1% of the EU’s total trade in goods.
However, in some sectors in India, the tariff barriers touch 150% or more. Added to this is the rising cost of transportation, which makes it difficult to offer competitive pricing. On the other side, for the same reasons, some Indian products have become way too expensive in the EU, putting a strain on their competitiveness.
This EU-India agreement is therefore of paramount importance. The negotiations are ongoing with the following goals: removal of barriers; opening up the services and public procurement markets; ensuring the protection of geographical indications; and pursuing ambitious commitments on trade and sustainable development.

France was the only country with a national pavilion at the ISSCT Congress. How can France contribute to the Indian sugar cane industry?

France is the leading producer of white sugar in the European Union. It is also the world’s second largest producer of beet sugar. France’s overseas territories, particularly Reunion Island located in the Southern Indian Ocean region, makes France the sole sugar cane producing country in Europe. The island’s historical connections with India further emphasizes its importance.
France has developed strong expertise across the full spectrum of the industry – from plant breeding and cropping techniques with public and private research centres, such as CIRAD and eRcane, to the optimization of sugar and ethanol processing with CODETEC, the business association representing French sugar equipment manufacturers. Altogether 11 companies took part in the French pavilion at the trade show, and a delegation of 25 researchers presented their papers at the congress. This robust presence of French companies and researchers in Hyderabad last month, shows how much India is important to us and how much France has to offer to this sugar cane sector for the rest of the world.