Indo-French bilateral relationship has gained significant momentum in recent years. Payal S. Kanwar, Secretary General of the Indo-French Chamber of Commerce and Industry (IFCCI), the nodal organisation mandated with advancing business collaborations between the two countries, shares her views on the strength of Indo-French trade relationship and how, going forward, the two nations will benefit from each other’s trade complementaries.

Interview by Ahmad Shariq Khan | March 2018 Issue | The Dollar Business

TDB: India and France have long been strong allies. Where does this relationship stand as of today?

Payal S. Kanwar (PSK): India and France first entered into a strategic partnership in 1998. Since then they have been working together in areas such as defence and aerospace, security, climate change and energy. The alliance between the two countries is built on trust, respect and mutual understanding. Both countries regularly consult each other on global matters keeping in mind their respective security interests.

Trade relations have progressed with the years. French corporations have been major investors in India which has made France one of the top investors in the country. More than 1,000 subsidiaries of French companies are active across 20 Indian cities, and these numbers are only set to grow in the coming times. However, it is my opinion that bilateral trade between the two countries has immense scope for further growth.

Both countries cherish and value each other as allies on the international stage. The state visit of H. E. President Emmanuel Macron to India further cements the Indo-French strategic partnership in areas of global importance.

TDB: Could you tell us a bit about the mandate and the nature of the activities being undertaken by IFCCI in India?

PSK: IFCCI was created in 1977 with the objective to strengthen Indo-French business relationships. Today, the organisation has four Chapters operating out of New Delhi, Mumbai, Chennai and Bengaluru. Together they have more than 550 active member companies in India and France.

IFCCI is a member of CCI France International, the network of the French Chambers of Commerce and Industry Abroad, which comprises of 118 French Chambers across the world. It is the largest private network of French companies in the world. Taking advantage of this large network, we reach out to and connect with companies to promote and facilitate collaborations in India.

Recently, IFCCI has also ventured into advocacy. We are providing a platform for French companies to discuss their concerns with representatives of the Government of India. This is a fairly new initiative but it has shown good results. IFCCI has successfully led delegations on behalf of French companies operating in India in various sectors like luxury, new and renewable energy, F&B, aerospace, etc. We have even organised meetings with several Chief Ministers so that they may find a compatible partner to do business with.

"France offers incentives such as research tax credit to attract R&D investments"

TDB: What is the scale and nature of Indian businesses currently operating in France? What incentives are on offer by the French government for Indians seeking business opportunities there?

PSK: According to the Annual Report 2016 published by Business France, there are over 150 Indian companies operating in France, which together employ more than 7,000 professionals. 11 new investments from India were recorded in 2016 which created and maintained 171 jobs. Indian investments in France in the last year were often in high value-added activities, particularly R&D and engineering (36%), decision-making centres (27%) including a European headquarter, and business services (18%). Investments came in a variety of sectors, including software and IT services (18%), energy and recycling (18%), aerospace, naval and railway equipment (18%), and textiles and clothing (18%) sectors. India was the 30th largest foreign investor in France with cumulative FDI inflows amounting to €188 million (as per December 31, 2014 statistics provided by the French Central Bank).

France has initiated multiple incentives and initiatives such as research tax credits to encourage companies to set up R&D operations in the country, a new labour law affording more flexibility to both workers and employers, and the French Tech Ticket visa programme inviting international entrepreneurs to set up their start-ups in France. In fact, Indians submitted the maximum applications for this programme. Out of these applications, 70 start-ups have been selected as laureates. India is the best-represented country amongst the laureates, with the highest number of selected projects and 19 Indian nationals are amongst the winners. That’s quite a feat, I would say. Indian innovation and entrepreneurship are in demand the world over and France is no exception.

TDB: Going forward, which are the key sectors where Indo-French collaborations will prove most beneficial?

PSK: India and France have mostly cooperated in the spheres of aerospace, civil nuclear energy, defence and environmental issues in the past. Collaborations in these sectors have been fruitful and will surely continue to be so even in the future. The two countries have eagerly shared, not only their scientific and technological breakthroughs but also their art, music and food in an attempt to better understand each other’s cultures.

In my view, the current focal areas for cooperation are civil nuclear energy, defence, counter-terrorism, space, foreign policy and combating climate change.

TDB: France and India both have a robust ecosystem of MSMEs that contribute significantly to exports. What are your thoughts on accelerating MSME-MSME collaborations?

PSK: SMEs account for one-third of companies in France. A large number of these SMEs export their products and services all over the world and India is no exception. MSME-MSME collaboration is vital when it comes to strengthening Indo-French trade ties. I believe both countries have been taking significant steps to enhance cooperation in this area to tap into the full potential that this opportunity presents. Going forward, with the efforts put in by various Indian and French trade associations, chambers, embassies and trade offices, this collaboration will only grow further.

TDB: There are now more than a 1,000 French companies in India. Has there been a noticeable improvement in ease of doing business in India? What issues have still not been addressed?

PSK: Every year around 1 billion euros worth of new investments are made by French companies in India. Big business groups are the usual investors, and the investments are meant to ensure funding of their local subsidiaries and for undertaking acquisitions and expansions.

In November 2017, IFCCI and Trilegal conducted a survey among many large French groups and released a white paper which was presented to the DIPP and ‘Invest India’ with several recommendations. The Indian government has already taken many steps to improve the ease of doing business for companies by introducing online portals for filing tax returns, fixing timelines for clearing applications and introducing the e-biz portal for facilitating single window clearance. The government has set a target to be in the top 50 in the World Bank ease of doing business rankings by 2030. However, some specific issues remain with regard to procedural complexities, administrative hurdles and delays. And these play a role in hindering smooth business operations for companies operating in India, including those that are French. The issues that still need to be addressed are ease of obtaining permits and approvals, improving administrative capacity, reforming labour laws and training of personnel, etc.

TDB: What are your thoughts on the Indian government’s flagship programmes such as Make in India, Digital India, etc.? Have French companies benefitted from these initiatives?

PSK: The Indian government’s flagship initiatives such as Make in India, Digital India, Skill India, etc., have been whole-heartedly adopted by French companies. Alstom is working on several metro projects including projects in Chennai, Kochi and Lucknow. Renault is one of the leading auto manufacturers in India. And there are dozens of other smaller French companies which are successfully manufacturing in India. Apart from these, there are 25 research and development (R&D) centres belonging to French companies that are currently operational in India. Getting behind the Skill India programme, Air Liquide, Danone, L’Oréal, Michelin, Renault, Safran, Schneider Electric, etc., are already training thousands of Indians, providing technical skills that are required by Indian industries.