France's President Emmanuel Macron Embarks on a Pivotal India Visit to Bolster Bilateral Ties

Thursday, January 25, 2024 Edit this post

By IndraStra Global Editorial Team

Cover Image Attribute: Indian Prime Minister Narendra Modi with French President Emmanuel Macron at Jaipur's Jantar Mantar. / Source: Official X Handle of Prime Minister of India.
Cover Image Attribute: Indian Prime Minister Narendra Modi with French President Emmanuel Macron at Jaipur's Jantar Mantar on January 25, 2024. / Source: Official X Handle of Prime Minister of India.
 
On January 25, French President Emmanuel Macron arrived in Jaipur, the capital of the northwestern state of Rajasthan, to commence a pivotal two-day state visit to India. The visit is poised to solidify the defense and strategic alliances between the two nations, marking a crucial moment in their diplomatic relations.

President Macron's visit holds a multifaceted agenda, encompassing cultural exploration, high-level talks with Indian Prime Minister Narendra Modi, and participation as the "Chief Guest" in India's 75th Republic Day celebrations in New Delhi on Friday. Originally, India had anticipated the presence of U.S. President Joe Biden, Australian Prime Minister Anthony Albanese, and Japanese Prime Minister Fumio Kishida as chief guests during the Republic Day celebrations. This aligned with the Quad group's plan, consisting of these nations along with India. However, the unavailability of President Biden led to a change in plans, resulting in President Macron's prominent role during the ceremony.

Macron's visit began with his landing in Jaipur, where he is scheduled to tour historical sites, participate in a vibrant roadshow, and engage in an evening of discussions with Prime Minister Modi. The symbolism of Macron's presence as the chief guest during the Republic Day celebrations underscores the strengthening ties between France and India. Three ministers are traveling with the President: Sébastien Lecornu, Minister of the Armed Forces; Stéphane Sejourne, Minister for Europe and Foreign Affairs; and Rachida Dati, Minister of Culture.

France, historically a key ally of India and its second-largest arms supplier, has been a steadfast partner for decades. Notably, it was the only Western nation that refrained from imposing sanctions on India following its nuclear tests in 1998. The upcoming visit is a symbolic affirmation of the strong ties that exist between the two countries.

The potential multi-billion dollar defense deals under discussion involve the procurement of French fighter jets and submarines for the Indian military. Earlier approval had been granted by the Indian government for the purchase of 26 Rafale jets and the joint production of three Scorpene class submarines, with an estimated value of around 800 billion rupees ($9.62 billion). However, these agreements are still pending finalization.

Macron's visit comes at a time when geopolitical dynamics are evolving, and nations are reevaluating their alliances. The French president's decision to visit India signals the importance of the Indo-French relationship in navigating these complex geopolitical landscapes. The collaborative efforts between France and India extend beyond defense, encompassing trade, technology, and cultural exchange.

As Macron engages in discussions with Prime Minister Modi, topics on the table are likely to include defense cooperation, joint military exercises, and the sharing of intelligence. Both leaders are expected to explore avenues to fortify their partnership, addressing contemporary challenges such as terrorism, cybersecurity, and climate change.

The visit has not only geopolitical implications but also cultural significance, as highlighted by the pre-arrival billboard featuring Macron and Modi in Jaipur. The emphasis on historical sites in Macron's itinerary reflects an effort to intertwine cultural understanding with diplomatic endeavors, fostering people-to-people connections between the two nations.

Beyond the immediate diplomatic and defense-related discussions, the visit is expected to yield economic outcomes. Trade and investment ties between the two nations have been growing steadily, and both leaders are likely to explore avenues for further economic collaboration. Macron's visit may see the announcement of new agreements and partnerships that could propel economic cooperation to new heights.

A Brief Note on India-France Economic & Commercial Relations


The economic and commercial relations between India and France form a vital component of their bilateral ties. The expansion of economic ties has been facilitated by various factors, including India's economic reforms, frequent high-level visits, and France's interest in Indo-Pacific markets. Twelve Prime Ministerial visits from India to France between 1992 and 2022, the visit of the Indian President to France in 2000, and seven visits by the French President to India from 1998 to 2018 underscore the growing interest of both governments in expanding trade.


France considers India a crucial market for its products, aiming to augment joint ventures and encourage investments in both directions. The collaboration extends to technology development, with ongoing efforts to enable the Unified Payment Interface (UPI). Several Indian companies have established innovation centers in France, fostering joint technology development. Notable examples include Tata Technology and L&T Tech Service, which contribute to the integration of French technologies in renewables, sustainable manufacturing, and urban infrastructure development in India.


Bilateral Trade in Goods


The bilateral trade between India and France has remained steady in the $11-12 billion range over the last five years ending FY 2021-22. Notably, the total trade for FY 2022-23, in the first eleven months, surpassed the $13 billion mark for the first time. Exports from India to France have shown consistent growth, reaching $6.64 billion in 2021-22, with an average growth of 7.1% over the period 2017-18 to 2021-22.


On the other hand, imports from France to India decreased from $6.5 billion in 2017-18 to $5.78 billion in 2021-22, reversing the trade balance in favor of India. The top five exports from India to France include engineering goods (€1.8 billion), ready-made garments (€600 million), petroleum products (€600 million), drugs and pharmaceuticals (€500 million), and electronics goods (€500 million). Conversely, the top five imports to India from France comprise aircraft, spacecraft, and its equipment (€2.3 billion), electrical and electronic equipment (€1.3 billion), machinery, nuclear reactors, and boilers (€800 million), optical, photo, technical, medical apparatus (€450 million), and organic chemicals (€250 million).


Bilateral Trade in Services


The trade-in services between India and France has witnessed both challenges and opportunities. Annual data from the French Central Bank indicates a decrease of 5.84% in Indian service exports to France from January to December 2021. However, specific categories such as maintenance and repair services (+68.96%), building and public works (+66.66%), transport (+30.07%), cultural, leisure, and personal services (+5.26%), and telecommunication, computer, and information services (+0.27%) recorded growth.


Conversely, Indian imports of services from France experienced a substantial growth of 73.81% from €2.24 billion in 2020 to €3.90 billion in 2021. Key contributing categories include transport (+136.02%), other services to businesses (+110%), commission for the use of intellectual property (+58.87%), travel (+55.35%), maintenance and repair services (+19.11%), manufacturing services supplied by physical inputs held by third parties (+18.96%), and cultural, leisure, and personal services (+14.28%).


Cross-Border Investments between India and France


France has emerged as a significant source of Foreign Direct Investment (FDI) for India, with over 1,000 French establishments operating in the country. As the 11th largest foreign investor in India, France has contributed a cumulative investment of $10.49 billion from April 2000 to December 2022. In a significant development that underscores the deepening economic ties between India and France, an English Indian steel manufacturing company has recently inaugurated its state-of-the-art facility in Arles, near Marseille. With an ambitious investment plan of 60 million euros, the company aims to focus on the production of ductile iron pipes, primarily used in waterworks infrastructure.


Simultaneously, the French subsidiary of Tata Consultancy Services, a leader in the IT industry and digital transformation, has embarked on a new stage of development in Poitiers, located in the Nouvelle-Aquitaine Region. This move comes with the inauguration of a service center, marking an acceleration in TCS's job creation plan. The company aims to recruit an additional 50 employees by the end of the first quarter of 2022, surpassing a total of 100 employees at the site.


In 2021, a total of 10 investment decisions from India were recorded in France, creating 212 jobs. These investments were diversified across production/manufacturing activities, decision-making centers, and business services. The IT services sector took the lead, accounting for the majority of Indian projects and employment, followed by the agri-food and textiles sectors.


Geographically, Indian businesses favored the Ile de France region (with Paris as its capital), Provence-Alpes-Côte d’Azur Region (Marseille's capital), and Auvergne Rhone-Alps Region (Lyon's capital) for their investments in France.


Analyzing France's position in Europe, the United Kingdom emerged as the leading European recipient of job-creating investments from India in 2021, capturing 41% of all Indian investments in Europe. Germany and France followed closely, with 11% and 9% shares, respectively.


The top five Indian businesses contributing to employment in France were identified as Tata Group (IT services & metalworking), Samvardhana Motherson Group (automotive), Centum Electronics (electrical & IT equipment), UPL (chemicals & plastics), and Mahindra & Mahindra (automotive).


As of December 31, 2020, the Foreign Direct Investment (FDI) stock in France stood at €350 million, according to the French Central Bank.


However, amidst these positive developments, certain challenges have arisen in the form of trade protection and rejection of Indian goods, particularly in the agricultural sector. In 2022, concerns were raised regarding the application of new minimum residue levels (MRL) for ethylene oxide, disqualifying a significant proportion of spices from tropical countries.


Additionally, issues related to the recognition of Basmati rice as a Geographical Indication (GI) product in the European Union were highlighted. The influence of France's rice association on the French Ministry of Agriculture played a role in opposing this recognition.


In an effort to address and enhance bilateral economic cooperation, various mechanisms have been put in place. The India-France Joint Committee for Economic & Technical Cooperation (JCETC), established in 1976, serves as a major institutional mechanism for cooperation in the economic and technical sectors. Joint Working Groups (JWGs) at the senior official level have also been constituted through Memoranda of Understanding (MoUs) to deal with specific aspects of economic cooperation, covering agriculture and food processing, IT & telecommunications, roads, sustainable urban development, and energy.


Bilateral agreements and MoUs have been pivotal in facilitating the expansion of commercial relations between India and France. The agreements range from the Double Taxation Avoidance Convention (DTAC) to cooperation in tourism, intellectual property, and social security exemption.


The India-France Economic Cooperation through the French Agency for Development (AFD, Agence Française de Développementnt) has been instrumental in extending credit for various projects in India. Areas of cooperation include energy efficiency, renewable energy, urban infrastructure, and biodiversity preservation.


Business associations such as the France-India Chamber of Commerce and Industry (CCIFI) and the India-France Business Club actively contribute to fostering bilateral relations by organizing joint activities and disseminating information on economic, trade, and industrial developments.


The CEO’s Forum, established during the French President’s visit to India in 2008, continues to play a crucial role in facilitating high-level dialogue and cooperation between Indian and French business leaders. Over the years, the CEO Forum has addressed key issues related to private-public partnerships, corporate social responsibility, sustainable development, education, employability, and skill development.


Conclusion


The comprehensive economic and commercial brief concludes that India and France have a strong and growing economic relationship. The inauguration of new facilities and the increasing Indian investments in France indicate a positive trend in bilateral economic ties. Although challenges remain in the agricultural sector, existing mechanisms, agreements, and forums are expected to help resolve these issues and further improve the overall economic cooperation between the two countries.


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IndraStra Global: France's President Emmanuel Macron Embarks on a Pivotal India Visit to Bolster Bilateral Ties
France's President Emmanuel Macron Embarks on a Pivotal India Visit to Bolster Bilateral Ties
By IndraStra Global Editorial Team
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https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXR_QnC96g9EW2Jo5c17razss1l0nV-3IiHevWtVeWZQ09yTKHaWpdeNhj9CLXJNEhgecTsSisexah125GxO5W5D4OhBMCS0ATS_KzLfys9bzolgDeUosCePBrvdiZMKsAo55tziGS0TGAsFOTnEdbEPQuPy9RLS9rQYY6QD1GjsLIiP3E9XPydI2pdbY/s72-w640-c-h360/GEs9bESWEAAN0VW.jpeg
IndraStra Global
https://www.indrastra.com/2024/01/frances-president-emmanuel-macron.html
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