Indo-French trade ties immune to political change

The newly appointed French Ambassador to India François Richier is confident about Indo-French trade and investment relations. Excerpts from an interview:

What are the implications of a change in Government in France on Indo-French trade and investment relations?

The new French President François Hollande confirmed to Prime Minister Manmohan Singh, during the G20 Summit in Mexico last May, that the strategic partnership between our two countries would continue to be the mainframe of our relations.

As for trade and investments, most French companies with a global strategy have already set up shop in India, not for short-term gains but for a long-term presence. In return, we expect more Indian investments in France. I believe that trade and investment relations between two democracies are, in great part, immune to political changes.

How do French companies view India given that there is a perception that it is difficult to do business here?

Most of our global firms have Indian subsidiaries and all of them are here to stay. Nevertheless, you will never hear a private company not wishing for fewer restrictions. Similarly, few will not plead for lower customs duties and taxes to increase their operations – be it in India or elsewhere.

Although India is no longer perceived as a closed market, companies feel that it still suffers from some of the stigmas of the “licence Raj”. Our companies are confident that the Indian authorities are taking the right steps to make it amore attractive destination to invest and develop one’s business interests.

What has been the impact of the Euro Zone crisis on Indo-French trade and investment relations?

Despite the current tough economic situation, developed countries continued to attract FDI inflows in 2011 with a rise of 18 per cent ($753 billion). The European Union not only remained the main beneficiary of these overall inflows (55 per cent of the total) but also saw a strong spike in FDI in 2011 (32 per cent).

France retained its position in Europe as far as employment-generating FDI is concerned, ranking second in 2011 (accounting for 17 per cent of the total investment projects in the European market), behind the UK.

France is the third among top European destinations receiving Indian investments. Indian entrepreneurs launched 12 new projects a year in 2010 and 2011 on our territory, the current total standing at around 100 Indian projects. These have generated approximately 5,600 jobs.

Thus, despite the international crisis, France remains a land of opportunities for Indian companies, whether they wish to be established there (83 per cent of the projects initiated by Indian companies in 2011 were newly founded) or be associated with French companies.

In December 2010 the leaders of the two countries set a bilateral trade target of €12 billion. Are we on course to achieve this? How?

The target you are referring to was set in January 2008. The crisis was not yet a looming reality; it later took its toll on our trade in 2009 but in 2010 our bilateral trade (both ways) grew by 30 per cent and in 2011 again by six per cent. Our latest figures (roughly €7.5 billion by the end of 2011 for goods only) indicate that we could come close to the target in 2013, particularly if, in addition to the traditional customs statistics, we consider trade in services.

This year the delivery of Airbus is clearly on the rise and with €350 million at year end, Indian agriculture surplus with France has never been higher.

The bilateral trade balance is heavily in India’s favour. What steps are being taken to correct that?

One should never forget that beyond the widening of the French deficit with India, there are some structural factors for this, the increase of our demand for refined oil products being the main one. This demand weighs heavily on our deficit with India. India has the largest oil refinery in the world!

However, we are expecting this deficit to narrow notably thanks to the sale of Airbus aircraft. In the longer run, important contracts linked to nuclear power may also help us reduce our deficit.

In 2011 India was the 13th largest job creator in France and the 2nd most prominent investor from emerging economies. What do the figures for the first five months of the current year indicate?

Emerging economies account for 15 per cent of the projects supported by the French Agency for International Investments every year. India occupies an appreciable part of this segment, just behind China. Our prospection and hosting projects focus on value-added projects, such as those involving aeronautical engineering. Results for the first half of 2012 are at par with those of 2011.

>ashwini.phadnis@thehindu.co.in

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