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France offers opportunities for Indian investments

Paris: Although the world’s largest single market of 500 million consumers in the European Union should be an obvious attraction to Indian investors overseas, this reality often went unnoticed among entrepreneurs, according to Philippe Favre, president, Invest in France Agency (IFA).

Talking to visiting journalists from India, he said France, the world’s fourth largest recipient of foreign direct investment, offered ample opportunities for Indian investment in the Information and Technology, pharmaceuticals and automotive sectors.

Some 40,000 jobs were created in 2006 by foreign companies doing business in France and they account for 16 per cent of the total number of employees in the market sector, according to a recent IFA report. Mr. Favre ascribed the FDI attractiveness of his country, a smaller economy than Germany, to a tradition of greater openness. In addition to its 63 million consumers, France boasts the world’s largest number of tourists of 79 million.

On the IFA’s India focus, he said the Indian economic and business establishment, on account of training and exposure, tended towards the United Kingdom’s viewpoint on Europe.

This to a large extent explained a lack of familiarity with the realities of a highly integrated European market and common customs tariffs and anti-trust regulation in the 27 member-states. He pointed out that this lag was peculiar to India, unlike Japan and China, where there was a more nuanced appreciation of the advantages of Europe’s investment climate.

The expansion of the eurozone — where the common currency the euro is adopted — to 15 states (Cyprus and Malta are set to join it from January 2008) would be an obvious boost to trade. Mr. Favre also referred to the Schengen area which enables travel among the member-countries with a common visa, a highly beneficial system for non-EU citizens that allows cross-border movement among firms based in different locations.

Asked whether the high labour cost involved in setting up businesses in advanced countries was not a deterrent to FDI flows, Mr. Favre said the sheer size of the market and infrastructure overrode wage considerations. This was borne out by the fact that the top 10 countries in terms of FDI, with the exception of China, were from the developed world.

Moreover, companies nurturing global ambitions and international brands could not achieve their goals without a presence in the EU, he said.

In a bid to raise Indian FDI inflow into France, the IFA has identified 300 Indian IT and pharmaceutical firms with an international presence as potential investors and recently opened an office in New Delhi.

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