Economy & Commerce> Indo French Relations

[Sourav]

The economic and commercial linkages have assumed increasing importance in India's bilateral relations with France. The economic reforms process in India, five Prime Ministerial visits from India to France (in 1992, 1995, 1998, 2003 and 2005) and visit of the French Prime Minister to India (in 2003), the visit of the French President to India (in 1998), the visit of our President to France (in 2000), and the growing French interest in establishing their presence in Asian markets have all contributed to a broadening of economic links. The series of high level visits in the commercial field in the last two years also shows the growing interest of both the governments in expanding the trade between the two countries. However, these levels are still far below the potential that exists. The Indo-French trade was 9.2 % of the Indo-EU trade in 2004.

TRADE

• According to the French trade statistics, the Indo-French bilateral trade went up by around 80% between 1995 and 2004, with Indian exports to France growing by about 97% over the same period. The two way trade between the two countries has touched the figure of € 3.64 billion during the 12 month period of September, 2004 to August, 2005. The balance of trade has been in India's favour since 1995, and for 2004 it was € 384 million.

• The statement provided below reflects the state of Indo-French trade over the last ten years :

• The global French trade from September 2004 to August 2005 was 712 billion euros out of which the Indo-French trade was only 0.51 %. The Indian exports to France for the same period were worth 2024.47 million euros and the French exports to India were 1619.85 million euros.

• The major items of French exports to India comprise of electrical equipment, aeronautical & space construction products, measuring & control equipments, iron & steel products, equipment for emission and transmission of sound & image, mechanical equipments, organic chemical products, para-chemicals, general & special usage machines, equipment for reception & recording of sound & image, etc.

• Indian exports to France consist of a wide range of goods and services spread over a large base of Indian companies, especially from the small and medium sector. While traditional items such as garments, textiles and leather exports constitute a major share of India's exports to France, a number of newly developed non-traditional items such as organic chemicals, refined petroleum products, metallic products and para-chemical products are gaining ground.

INVESTMENT

• An analysis of the foreign collaborations and Foreign Direct Investment (FDI) approved by the Government after the announcement of new industrial policy since August 1991 shows that FC approvals and investment from France has risen substantially. From August 1991 to March 2005, Government has approved 26,631 foreign collaboration (technical & financial) proposals with a corresponding foreign direct investment of Rs. 2,520.05 (US$ 67.65) billion. Out of this the total number of approvals with France have been of the order of 885 (3.32% of the total approvals) with an equity participation of Rs. 66.59 (US$ 1.74) billion (2.57% of the total Investment). French companies rank 9th in the list of countries in terms of cumulative FDI approved from August 1991 to March 2005. Top sectors attracting FDI approvals (during August 1991 to March 2005) from France are Fuels (power & oil refinery) (16.89%), Chemicals (other then fertilizer) (16.25%), Cement and Gypsum Products (14.37%), Glass Industry (10.08%) & Food Processing Industry (6.98%).

• The cumulative FDI inflows (net of ADRs/GDRs) during 1991-2005 (up to March) are US $ 33.35 billion. France ranks 7th with cumulative FDI inflows (net of ADRs/GDRs) at US $ 0.76 billion (2.84%). Top sectors attracting FDI inflows (during January 2000 to December 2004) from France are Chemicals (other than fertilizers) (20.62%), Cement and Gypsum Products (20.15%), Services Sector (financial & non-financial) (8.83%), Fuels (power & oil refinery) (6.28%) & Electrical Equipments (including computer software & electronics) (3.46%).

• The top French companies which have invested in India are M/s Lafarge(Cement & Gypsum), Air Liquide International(Chemical (other than Fertilizers), Usinor Sacilor (Ugine Division)( Metallurgical Industries (Ferrous)), Group Danone(food), Saint-Gobain(glass), Total SA(Fuels) , Compagnie International Du Radio Telephone(Telecommunications (Cellular Mobile/ Basic Telephone Services)), Total Gas & Power India (Fuels (Oil Refinery)), Ciments Francais(Cement & Gypsum Products) etc. The economic arm of the Regional most industrialized Rhone Alps region of France has recently opened an office in New Delhi to give impetus to the trade between the region and India.

• The Bilateral Investment Protection Agreement (BIPA) between India and France was signed by the then Finance Minister, Mr. P. Chidambaram, during his visit to France (September 1-2, 1997). During the visit of the Indian President, the letters confirming the completion of constitutional procedures on both sides, were exchanged on April 17, 2000. The Agreement came into effect 30 days thereafter. There already exists an agreement on Avoidance of Double Taxation.

FINANCIAL PROTOCOL

• The Financial Protocol for 1997 was finalized for an amount of FF 125 million and signed during French President Jacques Chirac's visit to India in January 1998. The projects covered include mining, infrastructure, health and fishing sectors. In the year 1998, the French Government replaced the Financial Protocol Provision, which was available to roughly 100 countries, with a new scheme that is available to only 12 countries which the French consider as important emerging markets for their products and services. The system of operation is the same as was under the erstwhile Financial Protocols. India figures among the 12 countries and is the only one from the South Asian region.

• After announcement in 2003 of the Government of India guidelines for acceptance of bilateral aid, Indo-French protocol projects were being considered on a case to case basis. Exemption was granted to two projects, namely, Tamil Nadu’s Chembarambakkam Water Project and Bangalore GIS Mapping Project, to facilitate their timely completion. However, the new policy on bilateral development cooperation announced on September 20, 2004 allows acceptance of development assistance from all G-8 countries as well as the European Commission.

JOINT COMMITTEE/WORKING GROUP MEETINGS

• The 13th Session of the Indo - French Joint Committee concluded successfully on 9th December, 2004 in New Delhi. The Indian delegation was led by Shri Kamal Nath, Hon'ble Minister for Commerce & Industry and the French delegation was led by H.E. Mr. Francois Loos, Minister for Foreign Trade. The two sides exchanged views on the current situation of their respective economies and prospects for the future and on WTO issues. The international economic scenario was discussed and the sides agreed to take concerted measures in coordination in order to expand and diversify the pattern of bilateral trade and investment. They addressed several issues concerning bilateral trade relations, bilateral financial relations and market access & agreed to take measures to promote investments and bilateral trade. Both sides reviewed the functioning of the Joint Working Groups, which are developing bilateral cooperation in key economic sectors of IT and Telecommunication, Mineral Exploration and Development, Roads, Energy, Urban Development & Posts. The two sides agreed to promote the continuing interaction between the private sectors of the two countries and the apex business chambers through the facilitating role of the two governments. discuss bilateral economic & commercial issues with the Indian and French civil servants delegations. The two sides also agreed to continue regular high-level dialogue at both bilateral and multilateral levels.

• An Mou was signed between the Ministry of Railways, Government of India and French National Railways (SNCF) on January 30, 2004 to promote and strengthen technical cooperation and development in the railways sector. The first meeting of JWG on Railways was held in Paris on May 25, 2004.

• The ninth meeting of the Indo-French Forum, which was presided by Mr. M. K. Rasgotra and Mr. Jean François Poncet, was held in Paris on October 13-14, 2003. The focus was on bilateral cooperation in the areas of Agriculture and Agro-food industry, Water & Environment, Science & Technology, Education, Culture & Media, trade & investment, among others.

IMPORTANT VISITS

• A delegation led by Shri Dipak Chatterjee, Secretary, Deptt. of Commerce visited Paris during 10-14 May, 2004 to represent India at the OECD Ministerial Council Meeting on trade issues as an invited non-member. The delegation also attended meetings of Five Interested Parties and coordination meeting of G-20 members & Cairns Group on WTO issues.

• Mr. Praful Patel, Hon'ble Minister of Civil Aviation, on a private visit, held a meeting with his French counterpart Mr. Gilles de Robien, Minister of Civil Aviation, Public Works, Transport, Land, Tourism and the Sea during which issues relating to strengthening bilateral cooperation in the field of civil aviation including purchase of aircraft by Air India and Indian Airlines were discussed.

• Shri Kamal Nath, Hon'ble Minister for Commerce & Industry(CIM) led a seven member delegation to Paris during 10-11 July, 2004 to attend the Ministerial level meetings of the "Five Interested Parties on WTO negotiations". On the side-line of these meetings, he also met Mr. Francois Loos, the French Minister for Foreign Trade on 11th July, 2004 and discussed bilateral trade & investment issues.

• Smt. Renuka Chowdhury, Hon'ble Minister led a ten member delegation to France from 20-22 September, 2004 to attend Road Shows to promote tourism. She also met the CEO of French Departmental Chain Stores giant Galeries Lafayette to promote the "India Promotion" event being planned in April-May, 2005 in France

• Shri Dayanidhi Maran, Hon'ble Minister for Communication and Information Technology visited France from 22-24 September, 2004 and met with Mr. Patrick Devedjian, French Minister for Industry, IT & Posts and discussed issues related to bilateral co-operation in Information Technology. He also met CEO of French telecommunication & satellite production major Alcatel to discuss ways to strengthen the French company's operation in India.

• Shri Kamal Nath, Hon'ble Minister for Commerce & Industry(CIM) visited Paris from 7-8 October, 2004 to address the seminar organised by the French Institute for International Relations (IFRI) on WTO issues. He also addressed Indian and French industrialists at the luncheon meeting organized by MEDEF for the visiting CII delegation.

• A ten member CII delegation, headed by former CII President Shri Dhruv Sawhney, visited France from 6-7 October, 2004. The delegation participated in a seminar on India at UBI France and a business lunch with members of MEDEF( CIIs French counterpart). The delegation members had separate meetings with Mr. Renaud Muselier, Minister delegate for Foreign Affairs and Mr Patrick Devedjian, Minister delegate for Industry.

• Shri Subodh Kant Sahai, Hon'ble Minister of State for Food Processing Industries visited Paris from 17 - 21 October, 2004 to inaugrate the India Pavilion at the SIAL Food Fair 2004.

• Minister for Foreign Trade François Loos visited India from December 6-10, 2004. He was accompanied by 20 representatives of major French consortiums and small and medium-size businesses as part of a MEDEF International mission.

• Nicolas Forissier, Secretary of State for Agriculture, Food, Fisheries and Rural Affairs, visited India from 12th -16th April, 2005. He met the Indian Agriculture Minister Shri Sharad Pawar, Minister of SSI & ARI Shri Mahabir Prasad and Minister for the Food-Processing Industries Shri Subodh Kant Sahay.

• Shri Ashok Jha, Secretary DIPP was in Paris on 7th April, 2005 to attend the OECD Investment Committee meeting. He gave a presentation on ‘Invest in India' and answered several questions raised by the OECD member countries.

• Shri Ashok Lahiri, Chief Economic Adviser visited Paris from 11th – 12th April, 2005 to attend the 2nd session of the OECD Global Dialogue on ‘Investment and Development'.

• French Minister for Infrastructure, Transport, Spatial Planning, Tourism and Sea Mr. Gilles de Robien visited India to attend the ‘Joint Working Group on Roads' on 25th April, 2005. The JWG was also attended by the Union Minister of Shipping, Road Transport and Highways Shri T. R. Baalu

• The Minister for Commerce & Industry, Shri Kamal Nath visited Paris from 3-5 May, 2005 to attend the OECD Ministerial Council Meeting, Meeting of Five Interested Parties (FIPs), Ministerial Meeting of IBSA, Meeting of G-20 Ministers and Informal Mini-Ministerial meeting on WTO issues.

• The Minister of State for Railways Shri R. Velu visited France on 23rd and 24th May to inaugurate the first Module of IRSMI(International Railway Strategic management Institute ) at HEC, Paris. He also had discussions with President, SNCF.

• MoS(PMO) Shri Prithviraj Chavan visited Paris on 1st – 2nd June to attend the Meeting on Sustainable Development in the OECD.

• Hon'ble Prime Minister of India was on an official visit to France from 12-14 September, 2005. Apart from bilateral talks, the Hon'ble PM had an interactive session with CEOs of top French companies in the presence of the French Minister for Foreign Trade.

• The Minister of Commerce and Industry Shri Kamal Nath visited Paris from 22-26 Septmber, 2005 to attend the G-4/FIPS meetings on WTO matters