India-France Strategic Partnership: Horizon 2047 Roadmap, Trade, and Investment

In January 2023, India and France, longstanding allies in the Indo-Pacific region, marked the 25th anniversary of their strategic partnership established in 1988. Recently, during Prime Minister Narendra Modi’s visit to France on July 13–14, 2023, to attend France’s Bastille Day celebrations, the two countries adopted an extensive roadmap called “Horizon 2047.” This roadmap will guide their bilateral relations until 2047 and encompasses various areas of collaboration, including defense, space, nuclear energy, climate change, green transitions, education, and people-to-people connections.

Furthermore, the two countries have also unveiled another roadmap focused on enhancing cooperation in the Indo-Pacific region. This roadmap entails military and naval exchanges and the creation of a trilateral development fund aimed at assisting countries in the region.

It must be noted that the joint statement following Prime Minister Modi’s visit to France skipped mentioning the India-France deal for the procurement of 26 additional Rafale jets and three Scorpene-class submarines. This exclusion was primarily due to the statement’s emphasis on a 25-year roadmap and the ongoing negotiations related to the acquisition of Rafale jets and submarines. While the Defense Ministry’s Acquisition Committee has cleared these acquisitions, key negotiations regarding pricing and other details are currently being worked out.

Horizon 2047 Roadmap: Strengthening bilateral relations between India and France

Under the Horizon 2047 framework, India and France have established three essential pillars to further deepen their enduring partnership:

• Partnership for security and sovereignty
• Partnership for the planet
• Partnership for the people

Partnership for security and sovereignty

• Digital public infrastructure (DPI): India and France are collaboratively developing open, free, democratic, and inclusive digital economies and societies through DPI. Initial focus areas include mobility, commerce, and culture, with the aim of showcasing the benefits of interconnectedness using open protocols.
• Critical technology: Guided by the Indo-French Roadmap adopted in 2019, India and France are actively advancing their partnership in digital technology and cybersecurity. Their joint efforts concentrate on cutting-edge digital fields, such as supercomputing, cloud computing, artificial intelligence (AI), and quantum technologies, aligning with the Global Partnership on Artificial Intelligence (GPAI). An agreement valued at over INR 9200 million (US$112.14 million) has been signed between Atos and the Ministry of Earth Sciences of India for the supply of supercomputers.
• Defense cooperation: Strengthening defense collaboration, India and France have witnessed notable progress between 2017 and 2021. Joint military exercises, including Varuna (a naval exercise), Garuda (an air exercise), and Shakti (an army exercise), have enhanced military cooperation. Collaborative endeavors, such as the Tata Group and Airbus’ partnership to manufacture C-295 tactical transport aircraft, have promoted defense production and technology transfer. Noteworthy agreements, such as the long-term LNG sale and purchase agreement between Indian Oil Corporation Limited and Total Energies and the technology transfer supported by Safran and Hindustan Aeronautics Limited (HAL) for the Shakti engine, further contribute to the Make in India initiative.
• Civil nuclear cooperation: In 2008, India and France signed a significant civil nuclear pact, making France the first country to forge such an agreement with India after the United States. This collaboration played a vital role in assisting India in constructing six EPR (European Pressurized Reactors) nuclear power reactors in Jaitapur, Maharashtra, fostering technological exchange and mutual progress in nuclear energy.
• Space cooperation: India and France have cultivated a strong partnership in space research, satellite technology, and exploration, facilitated by a joint working group established between the Indian Space Research Organization (ISRO) and the Centre national d’études spatiales (CNES). Notable collaborative endeavors include a planned Joint Mars Mission. Their cooperation also extends to satellite launches, Earth observation missions, and space debris management, allowing for valuable data collection and analysis to address global environmental challenges. Additional commitments, such as the agreement on Conjunction Analysis and Evaluation Services: Alerts and Recommendations (CAESAR) and the use of Java modules for Assessment of Conjunction (JAC) software, further emphasize their dedication to enhancing space safety and efficiency.

Partnership for the planet

• Financing the energy transition: France’s commitment to supporting India’s sustainable cities program, CITIIS 2.0, is evident through significant financing valued at INR 9,230 million (US$112.51 million) from the French Development Agency, co-financed by the European Union and KFW of Germany. Additionally, Proparco has secured INR 2,460 million (US$29.99 million) in financing for the South Asia Growth Fund (SAGF III), dedicated to investing in energy efficiency and clean energy projects. Furthermore, a financing arrangement of INR 1,640 million (US$19.99 million) from Proparco with Satya Microcapital will facilitate microfinance access for rural Indian women.
• Decarbonized hydrogen: In line with the Indo-French roadmap for decarbonized hydrogen, the two countries are collaborating on the production of electrolyzers in India through a partnership between McPhy and L&T.
• Blue Economy: The National Institute of Ocean Technology (NIOT), Ministry of Earth Sciences (MoES) and Institut Français de Recherche pour l’Exploration de la Mer (IFREMER) have signed a memorandum of understanding (MoU) to foster collaboration on projects related to the Deep Ocean Mission. This agreement facilitates the exchange of scientific and technical expertise between the two institutions, supporting joint efforts in exploring and studying the depths of the ocean.

Partnership for the people

• Student mobility: France has set ambitious goals to host a significant number of Indian students, aiming for 20,000 by 2025 and 30,000 by 2030, in order to strengthen educational ties between the two countries. To facilitate this process, Indian students who hold a master’s degree from a French university will be granted a five-year short-stay Schengen visa. To ensure smoother student exchanges, France will allocate more resources to the Campus France network in India. Moreover, special international classes will be established to support the integration of Indian students who do not speak French into the French higher education system. Furthermore, prestigious Indian institutes, IIT Delhi and IIT Madras, have signed Memoranda of Understanding (MoUs) with the Institut Polytechnique de Paris (IPP), fostering academic collaborations between the institutions.
• Diplomatic and consular networks: To enhance engagement and cooperation, both countries are expanding their diplomatic and consular networks. India will establish a Consulate General in Marseille, while France will set up a Bureau in Hyderabad.
• Research: France has become India’s eighth-largest scientific partner, with 25 French research and development (R&D) centers in the country. To strengthen their research collaboration, both nations allocate US$5 million annually to scientific and technological cooperation. Funding for the Indo-French Centre for the Promotion of Advanced Research (IFCPAR/CEFIPRA) has also been increased, enabling joint support for new and promising research projects.

India-France bilateral trade and investment profile

Bilateral trade trends

Within the European Union, France holds a prominent position as India’s fifth-largest trading partner. In the financial year (FY) 2023, the bilateral trade in goods between the two countries reached US$13.4 billion. Furthermore, the trade in services amounted to US$6.3 billion in 2021.

India’s exports to France have witnessed steady growth with an average rate of 7.1 percent, increasing from US$4.9 billion in FY 2018 to US$6.64 billion in FY 2022.

On the other hand, India’s imports from France have experienced a decline, decreasing from US$6.5 billion in FY 2018 to US$5.78 billion in FY 2022. This reversal in the trade balance has favored India, highlighting a shift in the import-export dynamics between the two countries.

Trade composition

India’s primary exports to France encompass a range of goods, including engineering products, such as turbojets, generating sets, and diesel engine components, valued at approximately US$2,016 million. Ready-made garments contribute around US$672 million, while petroleum products like automotive diesel fuel and aviation turbine fuel also amount to US$672 million. Additionally, drugs and pharmaceuticals make up approximately US$560 million in exports, and electronics goods, including electrical transformers and circuitry parts, contribute a similar amount of US$560 million. In FY 2021, India’s major exports to France were mineral fuels, mineral oils, and products, such as bituminous substances and mineral waxes, amounting to a total value of US$812.29 million.

On the flip side, India’s major imports from France consist of aircraft, spacecraft, and associated equipment, valued at around US$2,576 million. Electrical and electronic equipment closely follow, with imports worth US$1,456 million. Machinery, nuclear reactors, and boilers represent approximately US$896 million in imports, while optical, photographic, technical, and medical apparatus account for US$504 million. Lastly, organic chemicals contribute approximately US$280 million to India’s imports from France. India’s imports from France in FY 2021 were primarily dominated by aircraft, spacecraft, and parts thereof, totaling US$2,146.54 million. This was followed closely by imports of nuclear reactors, boilers, machinery, mechanical appliances, and their respective parts, amounting to US$829.05 million.

Investment profile

France has emerged as the 11th largest foreign investor in India, accumulating a substantial amount of foreign direct investment (FDI) amounting to US$10,545 million from April 2000 to March 2023. There are more than 1,000 French businesses operating in India. Conversely, in France, there are over 200 Indian businesses operating, with a noteworthy investment stock of US$1.12 billion.

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In terms of FDI inflow, India witnessed its highest influx in 2020, receiving approximately US$1,900 million. The top five sectors attracting FDI equity inflow from France to India include services (18.05 percent), cement and gypsum products (9.29 percent), air transport (including air freight) (7.59 percent), miscellaneous industries (7.24 percent), and petroleum and natural gas (7.10 percent). Collectively, these sectors represent 49.27 percent of the total equity inflow from April 2000 to December 2022, underscoring the robust economic cooperation and shared interests between India and France.

To foster even closer economic ties, Invest India and Business France have signed an MoU aimed at facilitating investors from both countries in each other’s economies. Additionally, India and France have recognized the importance of new and emerging domains, such as startups and digital technologies. They have agreed to deepen cooperation in research partnerships, innovation, and industrial applications of critical digital technologies, with a particular focus on addressing climate change and health-related challenges. Notably, India has actively participated in events like VivaTech, a prominent platform for technology, innovation, and startups in France, further strengthening the bilateral collaboration.

French investment in India

In India, the presence of more than 1,000 French companies is significant, contributing to a total turnover of US$20 billion and providing employment to approximately 300,000 people. These companies have made substantial investments, with a minimum stock investment portfolio of US$19 billion. Notably, 39 out of the 40 companies listed on the CAC 40 (French stock market index) have established their presence in India, highlighting the strong business engagement between the two countries.

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France and India are collaborating closely to develop smart cities in Chandigarh, Puducherry, and Nagpur. To support this initiative, France has already committed over US$2.2 billion towards India’s smart cities project, demonstrating their commitment to sustainable urban development.

Several major French companies have established a significant presence in India, including Engie, Groupe PSA, Roquette, Renault, and Schneider Electric. Furthermore, numerous prominent French groups have subsidiaries operating in India, such as BNP Paribas, Capgemini, Airbus, Dassault, Arkema, L’Oréal, Sanofi, Total, and many more. This presence reflects the diverse sectors and industries where French companies are actively engaged in India’s growing economy.