Western Europe Has Long Been an Important Source of Finance into India. Investment Is Now Starting to Flow in the Opposite Direction, as Indian Firms Acquire Manufacturing and Service-Sector Assets in Europe

By Chaudhuri, Saumitra | European Business Forum, Autumn 2006 | Go to article overview

Western Europe Has Long Been an Important Source of Finance into India. Investment Is Now Starting to Flow in the Opposite Direction, as Indian Firms Acquire Manufacturing and Service-Sector Assets in Europe


Chaudhuri, Saumitra, European Business Forum


There are more dimensions to life than mundane economics, however loathe some economists may be to acknowledge it. For India, Europe matters not only for good reasons of economics but also in terms of strategic interest and for reasons of culture. I will focus on the reasons mundane, in the full knowledge that there are others better equipped to deal with the subtler dimensions.

Western Europe has always been an important trading partner and source of overseas financing for India's trade deficits. In times past, the latter took the form of development assistance; as we shed the burden of underdevelopment, the financing source has switched from aid to private investment - both direct and portfolio. Indian companies are also investing in manufacturing and service-sector assets in Europe, making investment, like trade, the two-way street that it perhaps always ought to be.

Viewed from the European end, the Indian market is yet small - just 1.5 per cent of imports into Europe and 1.9 per cent of its exports. However, from the Indian perspective, Europe looms larger. In fiscal 2005/06 (April to March), Western Europe bought 22 per cent of India's exports and supplied 20 per cent of India's imports, leaving a trade balance in favour of Europe of [euro]3.6bn. By geographic region, Western Europe was the single largest block in India's trade. North America absorbed 18 per cent of Indian exports and supplied six per cent of India's imports. With East Asia, both exports and imports were 16 per cent of India's global totals; with South East Asia it was ten and seven per cent for exports and imports respectively.

Western Europe is particularly important for certain important categories of products. Cotton textiles and apparel are a major component in India's export portfolio. Western Europe bought 39 per cent in 2005/06, more than the 32 per cent shipped to North America. In leather goods, garments and footwear, the European market accounted for as much as 70 per cent, while North America took 17 per cent; in handmade woollen carpets the proportions were 42 and 46 per cent respectively. These are all consumer goods; they also happen to be labour intensive and draw from a large pool of indigenous skill and talent. For this kind of product, it is Europe and North America that are, and will continue to be, by far India's biggest markets. On the import side, Western Europe was the biggest supplier of capital goods, supplying 44 per cent of India's imports during 2005/06, with the ratio being as high as 50 per cent for general machinery. The proportion of such items imported from North America was smaller at 12 per cent.

Even if present volumes viewed from Europe may be small, the initial conditions for future expansion are extremely favourable. The prospective needs of India's growth will boost the demand for capita! goods. To this we can add the widely known purchases of civil and military defence equipment and airplanes, which often do not show up in the trade statistics.

[ILLUSTRATION OMITTED]

Not surprisingly, Western Europe has been an important source of foreign direct investment (FDI) into India.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Western Europe Has Long Been an Important Source of Finance into India. Investment Is Now Starting to Flow in the Opposite Direction, as Indian Firms Acquire Manufacturing and Service-Sector Assets in Europe
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.