The Europe India Chamber of Commerce (EICC) and European Business and Technology Centre (EBTC) in active co-operation with the European Business Group (EBG) released a special study report today highlighting the growing spread of European FDI into India. Titled ‘European Companies in India: Reigniting Economic Growth’ the report is the first work of its kind at a pan-European level, serving as a comprehensive guide for information, statistics, analysis and trends pertaining to European investments for 2004 to 2013.
EUROPE FDI: LARGEST FDI PARTNER TO INDIA
European companies had spent $198 billion in the country during the last ten years. In the same period, Japanese and US firms channelised $138 billion and $50.7 billion respectively into their India units. This gives EU enterprises the distinction of being the largest inbound investor into India. EU firms have spent $118 billion on 2566 Greenfield projects. EU companies also acquired interests in 1442 companies for $80 billion.
“Tactical Greenfield investments, landmark acquisitions and steadfast dedication through uncertain economic cycles have been the key ingredients of the success enjoyed by European companies in India,” said Sunil Prasad, Secretary General of EICC. “The study finds that despite the challenges facing the Indian economy, EU firms are optimistic about the next five years. The common consensus is that the next government would usher in a fresh round of growth,” Prasad added.
The study shows that EU companies collectively provide direct employment to 1.5 million Indians as against a few ‘hundred thousands’ in the late 1990’s. Of this, about 562,335 new jobs were added in the last 10 years alone through the Greenfield route.
“To ensure continued high levels of FDI, essential to India’s future economic growth, Government and Industry alike must engage in novel thinking and disciplined implementation – only then will the so urgently required paradigm shift happen” said Mr. Poul V. Jensen, Director of EBTC.
INDIA IS WHERE BUSINESS IS – RECOMMENDATIONS FOR COMPANIES KEEN TO INVEST IN INDIA
There are significant value creation possibilities across sectors such as education, energy, food processing, life sciences, advanced engineering and infrastructure. The report says European companies that manage to succeed in India could replicate the same growth model in several other developing countries. It encourages EU companies to adapt their products and services to the mass market and take a long term view of India. “The global headquarters should not expect their India units to rake in the profits every quarter. Companies that invest in India need to have lot of patience and deep pockets to sustain cash flow uncertainties. They should focus on the potential and not the short-term challenges,” said Adith Charlie, EICC’s Research Head and author of the booklet.
Over the last two years, the Government has taken decisive steps to remove FDI barriers in a range of sectors. While the report lauds these measures, it calls for swift implementation. Modalities such as land acquisition, revenue sharing and others must be discussed and debated by the states and the Centre before a formal policy decision is taken. Many EU companies find out that the actual market scenario in India is distinctly different from their original understanding.
Reforms need to be initiated in trade facilitation and export promotion. India must sort out some contours of its Intellectual Property Rights regime. The legal system must be fast-tracked and the use of compulsory licensing (CL) for essential pharmaceutical drugs must be the exception and not the norm, the report suggests.
For more information on the report, please contact:
About EICC
The Europe India Chamber of Commerce (EICC) is recognized as the Apex Chamber of Europe that promotes bilateral trade between European Union and India. The EICC speaks for multilateral rule based trading system and improvement in European and Indian competitiveness. The chamber is realising its mission through high level strategic dialogue and debate in which trade and economic issues are intensively discussed. EICC has been headquartered in Brussels, since 2005, from where it serves EU-India economic relations nationally and internationally.
About EBTC
The European Business and Technology Centre (EBTC) is an initiative co-funded by the European Union (EU), and coordinated by EUROCHAMBRES. Focusing on the 4 key sectors of Biotech, Energy, Environment and Transport, EBTC assists the business, science and research community – in Europe and India – to work together towards generating new business opportunities in clean technology transfer. EBTC offers a customizable toolbox of services serving the needs of EU and Indian businesses, researchers, clusters and policy makers.