EU-India trade: Facts & figures

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Oct 17, 2006 12:35 PM IST

EU imports from India came to ?18.9bn in 2005 covering mainly textiles and clothing, agricultural products and chemicals.

• The EU is India's largest trading partner accounting for a fifth of India’s trade. EU imports from India came to €18.9bn in 2005 covering mainly textiles and clothing, agricultural products and chemicals.

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EU exports to India amounted to €21.1bn, of which the majority was machinery, chemical products and gems and jewellery.

Since 2001, bilateral trade between the two has grown by 11 per cent on average.

• A good example of this trend is trade in services between India and the EU, which has increased significantly in recent years — in both directions.

In 2004, India's exports of services to the EU were valued at €3.8bn, whilst the EU's exports of services to India came to €3.2bn.

This is an economic area with rich potential for future EU–India bilateral business, which would create strong prospects in terms of trade, job creation and economic growth.

• The EU is both the leading foreign investor in India and also a major destination for Indian investors.

In 2005-2006, the EU was the main destination of Indian FDI with one in four dollars invested by an Indian company going to the EU.

The EU invested €1.1bn in India in 2004, which represented 1.4 per cent of total EU outflows.

EU investment has mainly taken place in the power/energy, telecommunications and transport sectors

• There is enormous growth potential in a number of other fields, such as financial services, especially banking and insurance; mechanical engineering, and
biotechnology with India being the world’s largest market for vaccines of all types.

• Indian companies are rapidly expanding abroad, with $10 billion worth of
investments abroad since 2000.

Indian firms now operating in the EU include India’s IT giants — Infosys, Tata Consultancy Services, HCL Technologies, Wipro and Birla Soft — but also a range of firms from various sectors, like Bharat Forge, Thermax, Tata Tetley, Compact Disk India Ltd, Mastek and Bank of India.

Indian foreign investment to the EU has increased fivefold in the last ten years.

• Indian textiles and clothing, a traditional staple industry, has significantly benefited from the removal of textile quotas. Indian textile and clothing exports to the EU reached €5.2 billion in 2005, as compared to €4.4 billion in 2004, reporting an impressive growth of around 20 per cent.

• Indian trade is defined by huge untapped potential. India accounts for only 1.5 per cent of world services trade and 1 per cent of global merchandise trade – yet Indians make up 1 in six of the people on the planet.

Unlike the growing economies of China and South East Asia the Indian economy’s growth rate of around 8 per cent is driven chiefly not by exports but by domestic demand.

• India combines first world capacities with third world poverty. Services trade
accounts for more than 50 per cent of India’s GDP – but 60 per cent of Indians still work in agriculture, most at a subsistence level.

Source: European Commission data

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