For Italian companies that intend export to India, what is the impact of the recent elections which saw the re-election of Prime Minister Narendra Modi? While the Bharatiya Janata Party (BJP) won only 240 seats, short of its absolute majority of 272 seats, the BJP-led National Democratic Alliance (NDA) coalition achieved a total of 292 seats. This allowed Modi to secure a third term, although he will now have to govern in coalition with other parties that will have greater influence on political decisions.
There re-election of Modi It comes at a crucial time for India, which needs to continue with massive investments in infrastructure and strategic sectors. The policies of the new coalition government could influence the decisions of private and foreign investors, who will have to consider the new priorities and direction of the government.
Despite a more complex political environment, the BJP is expected to continue promoting policies conducive to long-term economic growth and investment. This is in line with India's goal of becoming the third largest economy in the world in the next years. For Italian companies, this represents an opportunity to access an expanding market, with the awareness of the need to understand and adapt to local political and economic dynamics.
Although the recent elections have introduced a certain degree of uncertainty into the markets, Narendra Modi's leadership suggests that India will continue its path of economic development, maintaining solid long-term investment prospects.
The speed at which the country is evolving and the need to diversify supply chains make it a very attractive destination for foreign investment, which is expected to flow into various sectors in the medium term.
Trade relations between India and the European Union have registered an increase in 30% in the exchange of goods in the last decade. Currently, the EU is the nation's tenth trading partner, representing the second largest destination market for European exports, after the United States. In the services sector, the value of trade reached €30 billion in 2020. Furthermore, the EU is the largest foreign investor in India, with foreign direct investment (FDI) amounting to around €60 billion. While challenges remain, such as EU-imposed non-tariff barriers creating concerns in India's agricultural and industrial sectors, there is clear political commitment to strengthen economic cooperation between India and the European Union.
The establishment of Trade and Technology Council (TTC) in May 2023 is a concrete example of this, with the aim of focusing on strategic technologies, renewable energy and resilient trade.
India is the fastest growing economy among the world's top twenty nations, in a year when New Delhi took over the presidency of the G20. In the second quarter of 2023, it recorded a growth of 7.8%. Even the most conservative forecasts indicate that this pace of growth will continue in the coming years, making it increasingly advantageous to export to India.
Over the next five years, the country is expected to contribute 12.9% to global growth, surpassing the United States, which stands at 11.3%. This year, India's GDP surpassed that of the United Kingdom, and it is estimated that by 2030 it will also surpass that of Germany and Japan, placing it in third place among the world's largest economies, just behind the United States and China.
In early 2023, the nation reached another significant milestone: with 1.4 billion inhabitants, surpassed China becoming the most populous country in the world. Furthermore, the young average age of its population is becoming a powerful driver of innovation and development.
This population growth is fueling a rapidly expanding consumer market, attractive to many Italian companies seeking sell in India.
The re-election of Prime Minister Narendra Modi should not negatively affect exports, but rather guarantee favorable stability for foreign investments, confirming current opportunities. India is making notable progress in modernizing a historically complex and outdated bureaucracy, facilitatingopening of new companies.
These efforts have further strengthened the economic relations between Italy and India, which are solid and focus on five key sectors identified in the 2020-2024 Action Plan, adopted during the Virtual Summit between former Italian Prime Minister Giuseppe Conte and Prime Minister Indian Minister Narendra Modi in November 2020: green economy, agri-food industry, infrastructure, digital and manufacturing/lifestyle.
In 2023, Italian exports to India recorded a growth of 7.6%, exceeding 5.1 billion euros, confirming the positive trend in product exports made in Italy towards this country, considered a strategic partner for Italy. Machinery and equipment represent the main item of Italian exports, with a share of approximately 39.9%, followed by chemicals, base metals and electronic devices.
The technology transfer offers a further opportunity for businesses interested in exporting to India, considering the nation's growing interest in technology and innovation.
Octagona, an expert in corporate internationalization strategies, can offer fundamental support in this sense. We work in the design of personalized entry plans and in assistance in obtaining specific certifications, such as BIS certification.
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