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French Connect

President Nicolas Sarkozy's December visit and some political will can see India-France trade double in three years.

Bertrand Collomb | Print Edition: December 12, 2010

The globalisation of the past 30 years, despite its shortcomings, has given all nations a new opportunity to experience economic growth in a world of open trade and investment. India has resolutely decided to take advantage of these opportunities, and now looks like being one of the most attractive markets of the 21st and 22nd centuries. But while the political and cultural relationships between India and France have always been excellent, the economic ties have not been as strong as they should, and could, be.

Yet, recently a lot of interest in India has developed. French international companies have now invested a cumulative $1.2 billion and already employ 120,000 people in India. The advantages of India for trade and investment are clear: a huge domestic market, with a growing number of people gaining significant purchasing power, a stable democratic political system, a legal system guaranteeing enforcement of contracts and rule of law, and a government policy open to international business and cooperation. The language issue, once a barrier, is now an advantage, as English has become one of the languages most used by French companies.

Bertrand Collomb
Bertrand Collomb
At the same time, French industry has developed expertise and know-how in areas which are of interest to India, and are key to the sustainable growth model that is now in the common interest of all countries. In the energy area, French companies have a global presence in clean energy sources. In nuclear energy, there are ongoing discussions with Areva-Alstom; as well as in solar-based solutions for rural areas. French initiatives to maximise energy efficiency could complement those already developed in India. French companies like GDF-Suez also have significant experience in natural gas management, liquefaction and storage. Issues of measurement, carbon metering or "smart grid" can also play a role, especially in peak demand.

India's infrastructure needs are obviously large, and France has the experience and expertise to finance and manage infrastructure in public-private partnerships. We know that land is a sensitive issue and will be better dealt with in a joint venture with an Indian company. French companies like Vinci are interested in such joint ventures, and can bring their experience in road "concessions", the French style of BOT (build, operate, transfer) formulas. Developing a business in India cannot be achieved only by supplying Western goods at Western prices.

Beyond the high income market, which can accept such goods, there is an enormous market that requires products adapted to customers with a lower purchasing power. Many French companies, such as Schneider or Lafarge, have now understood that and are prepared to develop such products. Sometimes there will be a need for an Indian distribution partner.

Similarly, several Indian companies now have a global reach and can develop subsidiaries or joint ventures in France, which would also open the European market for them. There have been several success stories in the last few years, like the case of Electrosteel which has based its European headquarters in Arles.

For trade and investment to develop between our countries, we still need to overcome some obstacles. The complexity of the Indian federal system and the overlapping state and central bureaucracies can be discouraging, especially for a company that has not learned to navigate it yet. Indian companies are wary of sometimes protectionist political reactions as well.

But with political will, the objective set by the two governments of doubling trade to e12 billion by 2012-13 should be achieved, and foreign direct investment from France could reach $10 billion in the next five years.

Collomb is honorary Chairman of Lafarge, the manufacturer of cement and construction materials. He is co-chair of the India-France CEO Forum

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