Overview of the Indian market and relations between Italy and India.
As the most populated country and fifth largest economy in the world (estimated nominal GDP to be USD 3.5 trillion by end-March 2023), India is continuously recording impressive growth rates notwithstanding the weakened global scenario. Driven by the dizzying increases in the middle-class population and domestic consumption, the Indian subcontinent has registered formidable growth rates in the last years (+8.7% in 21-22, + 7% in 22-23, and an estimated + 6-6.8% for the FY 23-24). These impressive figures can be traced back to the reforms implemented in recent years by the Modi government that have given a strong boost to the entire economic system and significantly improved the ease of doing business as well as the increasing focus placed on India as an attractive destination country and manufacturing hub.
“Today, India is considered the one of the most important and strategic countries in the global arena by both companies and international analysts.”
Relations between Italy and India have grown tremendously in the past six years, inaugurating a new strong phase of collaboration which has reached its 75th anniversary of official bilateral relations. The ascent began in 2017, with the visit of then Prime Minister Paolo Gentiloni. Subsequently, Giuseppe Conte’s October 2018 trip on the occasion of the India-Italy Tech Summit helped mend the relations further, as did Modi’s visit to Rome, hosted by Mario Draghi in 2021. On March 2nd, 2023, Italy’s Prime Minister, Giorgia Meloni, met Indian Prime Minister Shri Nerendra Modi as an official guest at the Raisina Dialogues, the most important Indian conference on geopolitics and economics. On the occasion the respective Prime ministers of the two countries expressed the will to strengthen bilateral and commercial relations and advanced discussions on a new defense agreement. Nonetheless, much can still be done to foster business between India and Italy. India can offer an important opportunity for Italian companies to grow and efficiently diversify their supply chains while the Indian market demands high end technology, know-how and skills to cope with the extraordinary economic development it is encountering. Made in Italy and Italian know how can only benefit from a consolidation of the relations between these two countries as India will soon be destined to become the third global economy.
In 2022 the total trade between India and Italy reached a record 14.9 billion euro with surplus in India’s favor of 5.2 billion. This was partly due to its growing role as a source of raw materials previously imported from Russia and Ukraine (mainly metals). In 2021 the total trade was 10.5 billion euro (surplus of 2.7 billion in favor of India) and 7.3 billion euro in 2020 (surplus of 1.2 billion in favor of India). After decreasing by 25% in 2020 (3 billion euro), exports toward India reached pre Covid-19 levels in 2021 increasing to 3.9 billion euro and rising once again to 4.8 billion euro in 2022.The main items exported in 2022 were: machinery and mechanical equipment for a total of 1.8 billion euros; chemicals and chemical substances for 635 million euros; metal and metal base products for 410 million euro; transport vehicles for 246 million euros, rubber articles and plastic material for an exported value of 240 million euros and electronic equipment for 221 million euro.
Italy, is the 18th investor in India, with a stock of around 6289 million euro. Among the sectors that have seen most Italian investments are the automotive, commercial services, services in general including financial, industrial machinery and components and electrical equipment sectors. According to the latest data available from India Ministry of External affairs during April 2000 to December 2020, Italia FDI inflow into India was of USD 3.02 billion.
expected Growth in 2023-2024
The main geographical areas in which Italian companies are present (estimated figures):
- DELHI NCR & NORTH with about 180 companies.
- MAHARASHTRA & WEST (MUMBAI AND PUNE) with about 250 companies.
- in the outskirts of the city of CHENNAI (TAMIL NADU) and BENGALURU with a total of about 160 companies.
- the City of CALCUTTA (West Bengal) with about 20 companies.
- there are other Indian states that are attracting the interest of Italian companies such as TELENGANA, ANDRA PRADESH and MADYHA PRADESH.
The main sectors in which Italian companies operate are (estimated figures):
- Agribusiness with around 49 companies.
- Automotive with around 84 companies;.
- Infrastructure and Construction Technology 16 companies.
- Industrial machines with 133 companies in total.
- Services with approximately 66 companies.
- Fashion and Textiles with 54 companies.
- Engineering (39 companies) Furniture and Materials (43 companies), Bank and Finance (8 companies), Education (8 companies), Health (9 companies), ICT and Electronics (12 companies), Logistics (16 companies), Pharmaceutical and Chemical (21 companies).