France

The India and France are two of the fastest growing economies in the world. The two countries have seen a quick growth in their  trade relations after the increase of trade opportunities in Asia. India is a suitable market for French investments. The series of high-level visits in the commercial and economic field reflects the growing interest of both the governments in expanding trade between the two countries.

Foreign Direct Investment Ratio between India and France

  • In 2018  a visit by the French leaders in India led to the formation of ‘Joint Strategic Vision of India France Cooperation in the Indian Ocean Region’
  • India was a goodwill partner at the G-7 summit held in France in 2019. The various outcomes of the collaboration included India-France roadmap on cyber security and digital technology.
  • The India France strategic dialogue was held in January 2021. The dialogue focused on bilateral trade and actions plans to improve the functioning of the same.

 

Agendas under the India France Strategic Dialogue

Sectors that attracted maximum FDI equity inflows from France 

Data Source: https://dipp.gov.in/

 

Many French companies have been actively doing business in India. A number of new companies have also established themselves, and currently setting up factories and plants. French companies that create airspace machinery have a in airspace market in India.

Leading French companies in India

 

Leading Indian Companies in France

  • India’s ranked at 63rd position in 2020. The country’s ranking on the World Bank’s Doing Business Report (DBR) of 190 countries, has improved from 142nd position in 2014 to 63rd position. It has earned a place among the world’s top 10 improvers for the third year in a row.
  • The Government of India has worked on creating a conducive environment by streamlining the existing regulations and eliminating unnecessary requirements and procedures to help businesses grow.
  • The focus is on reduction in compliance burden by using technology, third party assessment and faceless human intervention.
  • India has simplified starting a business by incorporating electronic memorandum of association and articles of associations. India currently ranks as a substantial nation for cross border trade and business investment by the World Bank.
  • Cross border trading has now been simplified with the start of post-clearance audits, upgrading port infrastructures, and enhancing the electronic submission of documents.
  • There has been an increase in infrastructure development projects due to reduction in the time and cost of obtaining construction permits.
  • These provisions were enabled to ease the process of doing business in India and reaching to investors around the globe.
  • Issues like resolving insolvency have been made easier by promoting reorganization proceedings in practice. As a part of Ease of Doing Business in India, the country has strengthened access to credit by amending its insolvency law. Secured creditors are now given absolute priority over other claims within insolvency proceedings.
  • To promote ease of doing business, India made paying taxes easier by replacing many indirect taxes with a single indirect tax, the GST, for the entire country. India also made paying taxes less costly by reducing the corporate income tax rate and the employees’ provident funds scheme rate paid by the employer.
  • As a part of ease of doing business in India, the country has strengthened minority investor protection by increasing the remedies available in cases of prejudicial transactions between interested parties.
  • India made enforcing contracts easier by introducing the National Judicial Data Grid which makes it possible to generate case measurement reports on local courts. Data Grid which makes it possible to generate case measurement reports on local courts.

India-France Joint Committee for Economic & Technical Cooperation (JCETC): The 18th session of the JCETC was held in November 2020. This committee is the institutional mechanism behind the trade and economic cooperation between India and France. Joint working groups are created by the MoUs signed under this committee focusing on various areas with the maximum trade exchange.

Joint working Groups under JCETC

India – France Strategic Dialogue: The India – France Strategic Dialogue is an annual meeting held between the two countries. The venue is alternatively changed between locations of these countries. The most recent meeting was in January 2021, during the pandemic. The two countries have a long history of sharing region in the Indian Ocean. This has been a great way to collaborate and create a safe space for trade and free movement. These dialogues play a major role for both the nations to discuss and improve the existing provisions.

 

Trade Related Dispute Settlement: All the disputes related to international trade between India and France can be resolved at an online module for filing and tracking complaints launched by the Director General of Foreign Trade (DGFT). The location for filing grievance is:  www.dgft.gov.in>Seervices>File Quality>Trade Grievances>Fill online application form

World Trade Organization - Dispute Settlement Body

The World Trade Organization is the only international governing body that decides the rules of trade. There are various WTO agreements signed by hundreds of nations, which form the process of trade between those nations. They aim to ensure a smooth flow of trade and provide free trade possibilities. WTO has a dispute settlement body that ensures if any trade related disputes arise, they are dealt within the organization and a free flow continues. The Dispute Settlement Body (DSB) acts as a general council for disputes settlement for its member countries. India is a leading signatory of DSB and has resolved various minor and major disputes through the DSB

MoU on Renewable Energy: A MoU on renewable energy cooperation between India and France was signed in 2021. The goal is to establish exchange of energy to achieve growth, equality and reciprocity. This MoU covers technologies relating to solar, wind, hydrogen ad biomass energy sectors. Exchange of personnel and data regarding multiple new projects will take place.

MoU on Railway Development: The governments of India and France signed two MoUs on development of high speed railways. The ministry of Indian Railways and SNCF (Société nationale des chemins de fer français) are currently working on a Semi High Speed Railway Project in Delhi and Chandigarh. An Indo-French Railways Forum to secure the current relation between the two nations will be created under these agreements.

Double Taxation Avoidance between India and France

In 1994 the Double Tax Avoidance Agreement (DTAA) was signed between India and France. The agreement covers tax residents of France and India. It covers income tax earned by the residents of both the nations. The agreement does not apply to shell companies, the shell companies are mere non-operating bodies with no real or contentious business activity records.

Any French company that has a permanent establishment in India; the profit attributable to the permanent establishment will be taxed only in India, and the same process will apply to any Indian company established in France.

The Indo-French relations are based on entirely on their economic relations. The two countries have over the years, created trade relations with each other with regard to different commodities. France considers India an important market for its products and is looking to increase the number of joint ventures

 

 

Two Indian banks have branches in France, they play a key role in business transactions.

 

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