About Us India-France Economic and Commercial Brief

India-France Comprehensive Economic and Commercial Brief



1. Overview of the French Economy


In 2021, France’s economy ranked 7th in the world with a nominal GDP of USD 2.71 trillion. According to the National Institute of Statistics and Economic Studies, INSEE, as an annual average, French GDP rebounded by 7% in 2021 (after -8% in 2020), with health restrictions affecting H1, followed by sharp growth, particularly in the middle of the year. According to the European Commission, French GDP is estimated to have grown by 2.6% in 2022 on the back of a substantial carry-over effect from 2021. The economy slowed down in the second half of 2022 in a context of significant supply bottlenecks and increasing energy and commodity prices. The first estimate for the fourth quarter of 2022 came in at 0.1%, after 0.2% in the third quarter. Private consumption was flat amid a significant decline in consumers’ confidence, while rising imports weighted on growth despite a muted domestic demand. Economic activity is expected to remain subdued over the first half of 2023, with a stable first quarter. Investment, in particular, is set to fall on the back of higher production costs, tighter financial conditions and heightened uncertainty. However, the projected deceleration of inflation is expected to allow for a gradual recovery in the second half of the year, with private consumption gaining momentum and investment growth rebounding as domestic demand and international trade bounce back. For the whole of 2023, GDP is forecast to expand only moderately in annual terms, by 0.6%.


The GDP per capita was USD 41,805 (€ 36,911) in 2021.


France is an important member of the G-7, OECD and G-20. Its technological strengths make it the leader in sectors such as aviation, space, food processing, transport, railways and agricultural research.


2. India-France Economic & Commercial Relations


The economic and commercial relations are an important component of India's bilateral relations with France. The economic reforms process in India, twelve Prime Ministerial visits from India to France in 1992, 1995, 1998, 2003, 2005, 2008, 2009, 2011, 2015, 2017, 2019 and 2022, the visit of our President to France in 2000, the visit of the French Prime Minister to India in 2003, the visits of the French President to India in 1998, 2006, 2008, 2010, 2013, 2016 & 2018, and the growing French interest in establishing its presence in Asian markets including in India have all contributed to the broadening of economic links. The series of high-level visits in the commercial and economic field reflects the growing interest of both the governments in expanding trade between the two countries. France considers India an important market for its products and is looking to increase the number of joint ventures and encouraging investments in and from India.


3. Bilateral Trade in Goods (excluding Military Equipment)


From January to December 2021, the India-France bilateral trade in goods (excluding military equipment) stood at € 12.58 billion (+39.17% as compared to the corresponding period the previous year). India’s exports to France were valued at € 6.70 billion, up by 39.36% during this period. Indian imports from France also increased by 38.98% to € 5.88 billion.


India-France Trade in Goods excluding Military Equipment in the last 10 years (in Million €)


Year

(Jan. 

to Dec.)

Indian Exports

to France

French Exports 

to India

Total

Trade

Balance 

of Trade

for India

Y-o-Y %

Changes

in Total Trade

2012

4,656

3,256

7,912

+1,400

+5.98%

2013

4,440

2,713

7,153

+1,727

-9.59%

2014

5,216

2,704

7,920

+2,502

+10.70%

2015

5,218

2,703

8,548

+2,196

+7.91%

2016

4,669

3,910

8,580

+759

+0.37%

2017

5,362

5,345

10,707

+17

+24.79%

2018

5,993

5,529

11,522

+463

+7.61

2019

6,238

5,358

11,596

+880

+0.64

2020

4,809

4,235

9,045

+574

-21.99

2021

6,702

5,886

12,588

+816

+39.17

Source: French Ministry for Economy & Finance (Data rounded off to nearest million €)


4. Bilateral Trade in Services


Based on annual data provided by the French Central Bank (Banque de France), the Indian exports of services to France from January to December 2021 registered of a slight decrease of 5.84% as compared to the same period of the previous year from € 2.51 billion to € 2.37billion, with the following five categories of services recording a growth (in descending order): 1) maintenance and repair services (+68.96%); 2) building and public works (+66.66%); 3) transport (+30.07%); 4) cultural, leisure and personal services (+5.26%) and 5) telecommunication, computer and information services (+0.27%). The two categories of services which recorded the largest decrease were: 1) financial services (-62.99%) and 2) pension and insurance services (-58.33%).


The Indian imports of services from France have however recorded a substantial growth of 73.81% last year from € 2.24 billion in 2020 to € 3.90 billion in 2021. The following seven categories of services contributed to this increase (in descending order): 1) transport (+136.02%); 2) other services to businesses (+110%); 3) commission for use of intellectual property (+58.87%); 4) travel (+55.35%); 5) maintenance and repair services (+19.11%); 6) manufacturing services supplied by physical inputs held by third parties (+18.96%) and 7) cultural, leisure and personal services (+14.28%).


India-France Trade in Services over the last 5 Years (in Million €)


Year

(Jan.-Dec.)

Indian Exports

to France

French Exports

to India

Total

Y-o-Y % of Increase/Decrease

2017

2,563

1,739

4,302

+32.85

2018

2,459

1,928

4,387

+1.97

2019

2,463

2,004

4,467

+1.82

2020

2,517

2,249

4,766

+6.69

2021

2,370

3,909

6,279

+31.74


Composition of India-France Trade in Services in 2021 (in Million €)


No.

Major Categories of Services

Indian Exports

to France

Indian Imports from France

1.

Manufacturing services supplied by physical inputs held by third parties

75

69

2.

Maintenance & repair services

98

268

3.

Transport

333

1,199

4.

Travel

47

87

5.

Building & public works

5

1

6.

Pension & insurance services

5

-122

7.

Financial services

84

27

8.

Commission for use of intellectual property

53

170

9.

Telecommunication, computer & information services

731

206

10.

Other services to businesses

921

1,995

11.

Cultural, leisure & personal services

20

8

12.

Goods & services of public administration

0

0

13.

Other services (not included elsewhere)

0

0


Total

2,370

3,909


5. French Investments in India


France has emerged as a major source of FDI for India with more than 1,000 French establishments already present in India. France is the 11th largest foreign investor in India with a cumulative investment of USD 10.49 billion from April 2000 to December 2022 which represents 1.68% of the total FDI inflows into India according to statistics provided by the Department for Promotion of Industry and Internal Trade (DPIIT). The highest FDI equity inflows are in the services sector (18.05%), with cement & gypsum products (9.29%) in the second place, followed by air transport (including air freight) (7.59%), miscellaneous industries (7.24%) and petroleum & natural gas (7.10%). These five sectors represent 49.27% of the total equity inflow from France from April 2000 to December 2022.


Most big French groups have their subsidiaries in India. There are also a few joint ventures and liaison offices of French companies in India. 39 of the 40 CAC 40 (French Stock Market Index) companies are present in India. Around 50-70 SMEs are also present in India essentially in the mechanical and pharma-chemical sectors. French companies are present in a wide range of sectors: services (BNP Paribas, Capgemini, Havas, Sodexo, etc.); pharmaceutical-chemical (Arkema, L’Oréal, Sanofi, TotalEnergies, etc.); aerospace (Airbus, Dassault, Eurocopter, Safran, Thales, etc.); agro-food (Bongrain, Danone, Lactalis, Lesaffre, Pernod Ricard, etc.); electronics (Crouzet, Oberthur, Safran, STMicroelectronics, Thales, etc.); construction mechanics (Alstom, Cermex, Legris Group, Poclain, Sidel, etc.); electrical components (Hager, Legrand, Schneider Electric, etc.); automobile (Faurecia, Michelin, Plastic Omnium, Renault, Valeo, etc.).


French investments cleared in 2021 and 2022 include amongst others Edifixio (technological services), Ceva Santé Animale (pharmaceutical products & vaccines), Worldline (transaction processing services) and Systra (urban & rail transport engineering).


[According to the estimates from the French Embassy in India, French companies employ around 300,000 persons in India and have a turnover of more than USD 20 billion and have a minimum stock investment portfolio of USD 19 billion].


FDI Equity Inflows from France


Financial Year

(April-March)

FDI Equity Inflows from France

INR Crores

USD Million

€ Million

Y-o-Y % Changes

2000-01

455

104

92

N.A.

2001-02

488

108

95

+3.5

2002-03