French investors’ confidence in India is growing: Envoy

Ksenia Kondratieva Mumbai | Updated on January 09, 2018

Alexandre Ziegler, French Ambassador in India

Bullish on expanding ties in defence, energy sectors

A month ahead of French President Emmanuel Macron’s visit to India to discuss various issues of economic and strategic cooperation, Ambassador of France to India Alexandre Ziegler says the confidence of French business in India’s growth has been constantly improving.

“We do believe in India’s growth. French companies are investing more and more here. If you take investments in the past two-three years or the ones in the pipelines, it is coming to about €1 billion per year, while accumulative investments are around €20 billion,” Ziegler told BusinessLine. “We have several major investments coming into the defence industry, in car manufacturing as Peugeot is going to start operations next year, in the energy sector, aviation and aeronautics sectors,” he added.

So far, energy, aeronautics and transport sectors, including railways, have dominated France’s investments in India. This will increase in the coming years, Ziegler said. Bilateral trade, which stood at €10 billion during the past several years it set to reach €12-13 billion in the coming years.

“We have been progressing by 25 per cent last year which is quite positive so I think there is still strong margin to progress,” he added. “We still see some challenges, and we are talking very freely on this with authorities, but we see very strong movements in the positive direction. The opening of the defence sector, the GST are definitely a great progress, so we see things moving on the ground too. French investors' confidence continues to be strong and it has been improving in the past two-three years”.

Energy focus

While France has been bullish on expanding its military ties with India through several major deals, including Rafale fighter jets, energy is another area where negotiations between the two countries have been progressing fast.

“We are very impressed by the commitment that has been taken by India on non-fossil energy... and we do strongly believe that this target will be achieved through a mix of renewable and nuclear energy,” Ziegler said.

According to him, French renewable companies currently own around 10 per cent of India’s installed renewable capacity. For the past one year, France has also been actively negotiating for the 9,900 MW Jaitapur nuclear power project in Maharashtra. In March 2016, French energy giant EDF had signed a preliminary agreement with Nuclear Power Corporation of India Ltd (NPCIL) to build six reactors on the site approved for the nuclear power plant more than a decade ago.

“It is a very ambitious project, the idea is to build 6 European Pressurised Reactors (EPRs) with total installed capacity of almost 10GW which will be the largest nuclear plant ever build in the world,” Ziegler said. While India and France are yet to conclude talks on the major issues, including nuclear liability and cost of the project as power produced by the nuclear plant has to be affordable for Indian power procurers, Ziegler said that having prospect of building six units at one go, and not in phases as had been proposed earlier, increases the ability of French companies to commit to larger amount of localisation that can be done for that project.

When asked whether nuclear power could compete with renewable energy in terms of cost to consumer, considering that renewable tariffs have been falling in India for the past two years, Ziegler pointed out nuclear power can be generated 24X7 which gives it an advantage compared to highly variable renewable energy sources.

“Maybe in some decades, with the progress we are making in storage, we might have renewable energy too available 24X7, but this is not the case now. So comparing cost per unit directly doesn’t make sense,” he added.

According to Ziegler, there is no doubt India will need more power generation capacity if it continues growing at the rate of 7-8 per cent, and the power has to remain affordable to sustain that growth.

Published on November 15, 2017

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