India, France Look Beyond Defence to Deepen Bilateral Economic Ties
Building on a strong alliance in the defence sector, India and France are now gearing up to significantly enhance their trade and investment relations. The focus is particularly on sectors such as clean energy, new technologies, and aviation. The visit of India’s Prime Minister Narendra Modi to Paris marks a pivotal moment in this collaborative journey.
France has increasingly become a vital source of Foreign Direct Investment (FDI) for India, with over 1,000 French businesses already set up in the country. As the 11th largest foreign investor, France has contributed a cumulative investment of $10.84 billion from April 2000 to December 2023. This economic engagement is poised to grow even further as both nations seek to capitalize on mutual opportunities.
During his visit, PM Modi will co-chair the AI Action Summit, a gathering aimed at fostering a cooperative approach to AI technology for innovation and the greater public good. This summit serves as an important platform for world leaders and global tech CEOs to exchange ideas and strategies.
Additionally, PM Modi will explore the International Thermonuclear Experimental Reactor project, which includes India and France as collaborative partners working towards harnessing energy for global benefits. As part of their green energy efforts to combat climate change, both countries are also engaging in discussions on small modular reactors to enhance bilateral civil nuclear cooperation.
French Foreign Trade Minister Sophie Primas expressed optimism about ongoing negotiations between India and the European Union. The goal is a “mutually beneficial” free trade deal that could further broaden economic interactions between India and France.
A landmark Horizon 2047 partnership was revealed in July 2023, aiming to solidify bilateral ties, encompassing both trade and investment aspects. Plans for an India-France Triangular Development Cooperation initiative are also in the pipeline, with 2026 being declared the India-France Innovation Year.
The President of the Chambers of Commerce and Industry France-India, Coumar Ananda, noted that trade between India and France remains under $20 billion, with predominant focus on defense and aerospace industries. This partnership is crucial for developing a self-reliant defence industrial and technological base for India. Both nations remain committed to co-developing and co-producing advanced defence technologies, potentially benefitting other countries as well.
A long-standing cooperation in military aviation has been emphasized with India’s timely receipt of 36 Rafale fighter jets ordered from France. Both countries are now set to expand this defence partnership by jointly developing a combat aircraft engine and supporting industrial collaboration on heavy-lift helicopter motorization under the Indian Multi Role Helicopter (IMRH) program.
The IMRH program’s progress is bolstered by the Shareholders’ Agreement between Hindustan Aeronautics Limited (HAL), India, and Safran Helicopter Engine, France, aiming at engine development. The successful completion of the first Scorpene submarine construction project (P75 – Kalvari), showcases a remarkable ‘Make in India’ initiative and the robust naval collaboration between Indian and French companies.
In naval defence, an MoU between Garden Reach Shipbuilders and Engineers Ltd. (GRSE), India, and Naval Group France, a leader in European Naval Defence, is set to drive collaboration in surface ship development, catering to requirements of India and international naval forces.
Both countries are also making concerted efforts towards a low carbon economy. This transition supports meeting the growing energy demand driven by India’s urbanization and industrialization while ensuring energy security and achieving the sustainable development goals outlined in the SDG7 and Paris Climate Agreement.
