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India-France Relations: Elevating Strategic Partnership through Techonomic Partnership

Rajesh Mehta .. Dr Mohit Anand Jul 14, 2023

With the recently concluded visit of Prime Minister Modi to France as the Guest of Honour for the Bastille Day celebrations. Beyond the symbolic and media hyperbole around the visit that also marks 25 years of the strategic partnership between France and India. The time has come for both nations to take concrete steps to diversify and deepen their partnership beyond the scope of Defence, Space and Civil Nuclear cooperation. We want to highlight the three key areas where there is immense potential for collaboration.

First is the economic partnership, France is the 11th largest foreign investor in India with a cumulative investment of $10.5 billion from April 2000 to December 2022. There are around 150 Indian companies operating in France. In 2021, the leading European recipient of job-creating investment from India was the UK, attracting 41 per cent of all Indian investment in Europe, followed by Germany (11 per cent) and France (9 per cent). Post-Brexit, several Indian businesses wanting to shift to mainland Europe are choosing France as their foremost place. On the other hand, there are more than 1,000 French establishments present in India that have a total turnover of $20 billion and employs 300,000 people and have a minimum stock investment portfolio of $19 billion. 39 of the 40 CAC 40 companies are present in India. The bilateral trade in goods between the two stands at $13.4 billion for 2022-23 accounting for less than 1.2 per cent of India’s total trade. Whereas the bilateral trade in services is at $6.3 billion in 2021.

Despite vast possibilities, economic and trade cooperation remains far below its potential. France is the 5th largest trading partner for India in the EU, falling behind, Germany, Belgium, Netherlands, and Italy. The trade between India and France less than half that with Germany. In contrast, more than 2,000 German companies are present in India with over $13.6 billion invested in its economy between 2000 and 2022. India and France need to chart a roadmap to increase trade and investment, as well as facilitate greater collaboration among companies and diverse sector-specific engagements. Industries such as IT, automotive, renewable energy, pharma, biotech can take advantage of these opportunities. Moving froward, the relationship should evolve from strategic partnership with greater emphasis on ‘techonomic partnership’. The announcement of the use of UPI payment mechanism in France is step in that direction. In addition, the ongoing negotiations for the India-EU Free Trade Agreement (FTA) can be a win-win situation for both nations – taking further the burgeoning relations between India and EU. In fact, it was under French presidency of the EU in January-June 2022, that the resumption of the India-EU FTA negotiations started after years of suspension.

Second area is security cooperation in the Indo-Pacific. France is one of the most proactive EU countries in the region. This zone is a strategic priority for France as over one million of its nationals live in its overseas territories in the region as well as an exclusive economic zone of 10.2 million square kms in the Indian and Pacific Oceans. India and France can leverage their security and intelligence apparatus as well as their naval presence to provide logistical support to each other in the region. It also provides a strong counterbalance to rising influence of China in the Indo-Pacific and in turn helps India to leverage French assets in the Indian ocean as a springboard to keep an eye on Chinese activities. For France, India is an important player in the evolving geopolitical architecture and to safeguard its economic and strategic interests in the region. In 2020 France became the 23rd member of the Indian Ocean Rim Association (IORA), an inter-governmental organisation to strengthen regional cooperation and sustainable development among the Indian Ocean member nations.

Third pillar of immense cooperation is on the socio-cultural and academic front. People to people and cultural connect needs to be envisioned between the two countries. For this, easier facilitation of visa process, promoting tourism and cultural exchanges as well as greater air connectivity between the two countries should be explored. Compared to UK or even Germany, the Indian diaspora is relatively small in France, with approximately 110,000 nationals. Nonetheless, the recent visit by Modi helped galvanized the diaspora across Europe and strengthen socio-cultural links between India and EU. Another sphere is promoting academic and research collaboration between the higher education institutions of India and France. Currently there are around 10,000 Indian students studying in France while the number is 34,000 in Germany. France and India need to strengthen this area of partnership, working further on joint research and scholarship programs etc. With New Education Policy allowing Foreign Higher Education Institutions to set up campuses in India, this is where French universities and business schools can leverage this opportunity to set up campuses in India taking advantage of young demographics and the need for quality and internationally accredited education in the country. To attract more Indian students to France, it was announced during the visit that Indian students pursuing master’s degrees in France can now get a five-year-long post-study visa.

Mohit Anand Rajesh MehtaHistory reflects upon France and India as close partners. Their relationship has been fostered during the past decades and has withstood the test of time. The strategic partnership is anchored on the solid bedrock of deep and consistent mutual trust. India and France need to now focus on further broadening and deepening their relationship in the coming years. They must chart a roadmap to enhance their engagement in areas such as trade, investment, technology, education, sustainable development etc. and thus it has all the potential to become one of the defining partnerships of the 21st century.

Dr Mohit Anand is Prof of International Business and Strategy at EMLYON Business School, France. Rajesh Mehta is a leading consultant and columnist working on market entry, innovation and public policy.