By Dr Mohit Anand and Rajesh Mehta
Prime Minister Modi is starting his first overseas visit to Germany and Denmark this year with a brief stopover in France on May 4. This will be his 4th visit to France since 2015 and could not come at a more opportune time with the re-election of Emmanuel Macron as French President and amid the Ukrainian conflict. There has been a growing bonhomie between the two nations, underpinned by the personal equation between Modi and Macron which further helps cement the strategic partnership – the first ever such partnership India has signed with any country during the visit of President Jacques Chirac in 1998.
This multidimensional partnership revolves around several areas of cooperation: civil nuclear, defence, trade and investment, transport, counter-terrorism, space, cybersecurity and digital. For India, France has been a reliable partner for decades. It was the only western country not to condemn India’s nuclear tests in the 1990s. It was one of the first countries to support India’s bid for the permanent seat in the UN Council of security. Lately, France has supported India’s position on Kashmir, while supporting the UNSC resolution sanctioning Pakistani terrorist Masood Azhar as well as tougher FATF sanctions against Pakistan. More recently, the two countries have extended their common interests in the Indo-Pacific, with France identifying India as one of its main Indo-Pacific partners and major players in the region.
Over the years, India’s defense cooperation with France has intensified, with the latter becoming India’s second largest arms supplier (after Russia). The supply of Rafael aircraft to India amid the Galwan crisis and the growing possibilities for increased security cooperation and intelligence sharing between them is a signal of mutual trust in their relationship. On April 20, the Indian Navy’s sixth and final Scorpene-class submarine was launched, built by the French naval group in conjunction with Mazagon Dock Shipbuilders Limited (MDL). It is now possible that France will offer its Barracuda nuclear attack submarine to the Indian Navy’s Project 75 Alpha during the visit of French Defense Minister Florence Parly to New Delhi last December. The signal comes as Australia abruptly cancels the $90 billion diesel-powered submarine deal with France and opts instead to pursue a nuclear-powered submarine option under the new partnership. AUKUS (Australia, UK and USA). Regardless of whether it was a major setback for France, analysts believe it was a positive thing for the Indian defense industry. The recently held 20th edition of “Varuna”, a five-day naval war game exercise between the two countries in the Arabian Sea, reflects the growing congruence in their security cooperation maritime. As Jaishankar commented, India sees France as a “trusted” partner in countering a myriad of security challenges, from seabed to space and from cyber to oceans.
The ongoing conflict in Ukraine creates a difference of opinion and posture that India and France (and EU countries) have on the fight against Russian intervention. India adopting a more neutral approach in relation to its foreign policy of non-alignment. There is, however, an implicit understanding of India’s position and its strategic constraints vis-à-vis Russia. In these difficult circumstances, the French IT company Atos recently transferred part of its Russian activities to India in order to provide critical digital services to some of its global customers. This creates opportunities for India as it could become an important FDI destination for French companies planning to diversify. This view was echoed by Franck Riester, France’s foreign trade minister in March, suggesting that India will play a key role as Europe and France seek to diversify their supply chains amid the Covid-19 pandemic. 19 and sanctions imposed on Russia in recent weeks.
The economic and trade partnership between the two is also on the rise. The recent visit of European Commission President Ursula von der Leyen to New Delhi has given new impetus to the ambitious India-EU Free Trade Agreement to be concluded by 2024. France, as the current President of the Council of the EU, is pushing this objective. This will inevitably boost investment flows between France and India. From January to December 2021, bilateral India-France trade in goods (excluding military equipment) stood at 13.3 billion dollars (+39.17% compared to the corresponding period of the previous year). India’s exports to France were valued at $7.1 billion, up 39.36% over the period. Indian imports from France also increased by 38.98% to $6.2 billion. Nevertheless, there is a wide scope for increased cooperation in areas such as innovation, education, renewable energy and the technology sector. More than 1,000 French establishments are already present in India, employing approximately 300,000 people and achieving a turnover of more than 20 billion dollars. France has a cumulative investment of $10.06 billion from April 2000 to December 2021. At the same time, around 200 subsidiaries of Indian companies are established in France.
As India and France celebrate 75 years of diplomatic relations. Prime Minister Modi’s visit is scheduled at an opportune time to further consolidate their bilateral relations and unlock broader areas of cooperation to address the challenges of the global economy.
(The Authors – Dr. Mohit Anand is Professor 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. The opinions expressed are personal and do not reflect the official position or policy of the Financial express online.)