Vive la difference
There's more substance now to India-France relationship
The visit of French President Nicholas Sarkozy, on the heels of a visit by the US president and on the eve of another by the Chinese premier and the Russian president, weeks before India’s assumption of a non-permanent seat on the UN Security Council, draws attention to India’s rising global profile. Business expectedly dominated the agenda during Mr Sarkozy’s visit. Mr Sarkozy pulled out all the stops to promote French exports, particularly in high technology, which France urgently needs to boost its flagging economy. The mutual interest in energising the economic relationship makes robust sense. Bilateral trade in 2009 at ¤5.37 billion ($7.1 billion) was 21 per cent lower than the corresponding figure for 2008, a consequence of the economic turmoil in Europe. While France is India’s fifth-largest trading partner in Europe, India is even lower on France’s radar, ranking 14th as a trading partner. To provide perspective, India’s two-way trade with China in 2009 was approximately eight times as large! While these numbers may reflect complementarities between India and China, arguing for an enhanced economic relationship between India and France would certainly not overstate the case.
Mr Sarkozy expectedly put French concern over being elbowed out of India’s primary and secondary market for defence supplies on the table. The emergence of the United States as a major supplier of products for the Indian armed forces has essentially reduced competition to two players, Russia being the other. The market for upgrades is dominated by Israel. Apart from the ongoing Scorpene submarine programme, running two years behind schedule, French defence suppliers do not figure as serious contenders in India’s ambitious modernisation programme. Hopes that the Dassault-Breguet Rafale, a highly sophisticated, multi-role successor to the Mirage 2000, would be selected for India’s “deal of the century”, the $10.4-billion MMRCA contract for 126 planes for the air force, may be dashed. At a per unit price of $70 million, it may well have priced itself out of competition.
The visit by President Sarkozy is both a reiteration of a growing relationship between two countries that seek a multi-polar world of greater balance, and their shared desire to take bilateral engagement to the next level. To this end, the decision to invest $13 billion in India is highly welcome, given the embarrassingly low level of participation by French firms in the India growth story. It would be reasonable to expect India to leverage this standing to drive concessions, on a wide range of issues ranging from access to European Union markets, to technology transfer and more liberal visa issues, to name just a few. While there is balance in the government-to-government (G2G), business-to-business (B2B) and people-to-people (P2P) aspects of the relationship, there is much distance to be covered on each front for the relationship to become a truly strategic partnership. The delay in clinching specific agreements on civil nuclear energy projects draws attention once again to India’s domestic political constraints that prevent the country’s political leadership from playing a stronger hand in international affairs.