French President Nicolas Sarkozy’s recent state visit to India and his presence at the Republic Day celebrations as chief guest reflected the deep commitment between the two countries to provide a new impetus to their strategic partnership.

Besides convergence of views on many issues such as international peace and security, nuclear non-proliferation, counter terrorism, etc, the two countries agreed on the importance of an early, balanced, and comprehensive outcome of the Doha Round of multilateral trade negotiations with a developmental focus. The French President also voiced his country’s full support to India’s nuclear deal with the US.

Nuclear Cooperation

The Joint Statement at the end of the visit said “the two countries wanted to broaden and boost their partnership in atomic field. To this end, France and India have finalised negotiations in regard to reaching a bilateral agreement for civil nuclear cooperation.”

Nuclear cooperation between the two will be subject to the Safeguards Agreement that India will sign with the global nuclear watchdog, International Atomic Energy Agency (IAEA). The agreement will form the basis of wide-ranging bilateral cooperation from basic and applied research to full civil nuclear cooperation, including reactors.

This will include an agreement between India’s Department of Atomic Energy and the French Atomic Energy Commission to build and operate a reactor in France. Another MoU between a joint delegation of the BARC-TIFR (Bhabha Atomic Research Centre and Tata Institute of Fundamental Research) and the French heavy ion accelerator facility Ganil for the use of a high-energy beam production system is also in the pipeline.

Bilateral Trade

Sarkozy’s visit to India signalled a strong bilateral economic cooperation in the next few years. During his meeting with the Indian counterpart President Mrs Pratibha Devisingh Patil, the leaders agreed to work together to enhance bilateral trade and investment to touch €12 billion (US$17.72 billion) by 2012. France is the fifth largest trading partner in the EU, after the UK, Belgium, Germany, and Italy. The French President also supported India’s bid for a permanent seat in the UN Security Council.

Best Friend

Addressing the industry forum of FICCI, President Sarkozy said, “France needs capital and entrepreneurs from India. Investors from India are welcome. The balance of the world has changed and India has a major role to play and France may be its best friend”.

French Ambassador to India, Jerome Bonnafont, noted that the bilateral trade between the two countries was poised to touch US$10 billion by 2012 driven by aeronautics and industrial equipments. According to FICCI, Indo-French trade could take a great leap if the trade basket could diversify to include more sectors such as energy, biotechnology, IT, infrastructure, pharmaceuticals etc.

Common areas are where both sides can explore include small, medium, and micro enterprises. The two sides also agreed to enhance the facilitation of visas for businessmen, professionals, and interns. The more Indian companies go global, the more is their presence in France. Leading the investment front are some prominent Indian pharmaceutical and IT companies. Presently there are 40 companies of Indian origin registered in France. France being a Euro-zone, heart of Europe, and access to markets of 14 Franco-phone Africa countries, India chooses the country as a perfect heaven for investors.

Agreements

In all, the two countries signed five agreements, including two for joint cooperation in science, at the end of the President’s visit. India and France resolved to triple bilateral trade to €12 billion (Rs 69,720 crore) by 2012, and signed a treaty to promote civilian nuclear cooperation between the two countries. Currently, bilateral trade between the two countries aggregates €4.5 billion, with France enjoying a trade surplus of €1.8 billion.

The two sides also discussed investment proposals of €10 billion over the next three years in retail, transport, trade and energy. The average of €3 billion worth of investments per year will be several times the current investment average of €67 million per year for French investments in India.

At present, India permits 51 percent FDI, in single-brand retail. Several global retail chains, including France’s Carrefour SA, have expressed interest to enter the Indian market. Currently, India allows foreign retailers such as Wal-Mart Stores Inc. and Carrefour to own 100 percent cash-and-carry subsidiaries that sell to businesses but does not allow full ownership of multi-brand stores selling to individuals. The two sides also discussed the proposal of French energy major Areva SA to invest in the energy sector.

Breaking Business Barriers

The two sides adopted proactive policies to sort out stumbling blocks in trade process. In 2007, during the CII Partnership Summit, Jean Burelle, President of MEDEF International (French Business Confederation) who headed French companies like Alstom, Areva, BNP Paribas, and Suez pointed out the sectors—energy, finance services, food processing, electronics—as having French know-how that could be of use to India.

The two countries wanted to eliminate the barriers that could retard bilateral trade. France had pointed out high tariff, technical hurdles, and low operational values as the challenges while trading with India. To iron out all trade barriers, the Indo-French joint committees have pledged to review all stumbling blocks in trade. The Bilateral Investment Protection Agreement (BIPA), in place since 2000, is an enabler for bilateral trade just as the Avoidance of Double Taxation adopted in 1992.

Cultural Centre in Paris

President Sarkozy’s state visit also became an occasion of people-to-people cooperation between India and France. Both sides agreed to deepen cooperation in the fields of education, culture, tourism and scientific research. It was agreed that efforts would be made for early establishment of an Indian Cultural Centre in Paris.

It was also decided to promote cooperation in the field of education to enhance linkages in educational systems with exchange of students. To promote such wide ranging people-to-people contacts, both sides agreed to the reciprocal opening of Consulates in each other’s territory. In this respect, France will introduce two new Consulates in Kolkata and Bangalore this year.