A Promising Future for India-Finland Collaboration

In 2024, India and Finland celebrate 75 years of diplomatic ties, marking evolving partnerships in digitalization, sustainability, and innovation.

India and Finland have enjoyed strong diplomatic relations since 1949, shortly after India gained independence. Over the years, the relationship has grown significantly, with both countries fostering deeper collaboration in areas like trade, economic development, science, and innovation. High-level visits, such as those by India’s Minister of External Affairs, Subrahmanyam Jaishankar, and Finland’s Foreign Minister, Pekka Haavisto, have played a vital role in this development.

Recent diplomatic engagements

As of 2024, India and Finland mark 75 years diplomatic ties, and both nations have seen their partnership evolve to include areas such as digitalization, sustainability, and innovation. On September 10, 2024, officials and business leaders, including Finland’s Ambassador to India, Kimmo Lahdevirta, highlighted the growing cooperation between India and Finland, driven by a framework called DESI, focusing on digitalization, education, sustainability, and innovation.

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Later this year, India’s Prime Minister Narendra Modi is set to visit Norway for the 3rd India-Nordic Summit, which will include Finland, Sweden, Denmark, and Iceland.

Last year, on November 1, India and Finland held their 12th Foreign Office Consultations (FOC) in New Delhi, led by Secretary (West), Ministry of External Affairs, Sanjay Verma from India and H.E. Mr. Jukka Salovaara from Finland. Both sides discussed political, economic, educational, and cultural collaborations. They agreed to commemorate the 75th anniversary of diplomatic ties in 2024. Global issues, such as the war in Ukraine and Arctic cooperation, were also on the agenda. The next FOC will be held in Helsinki.

Finland has historically sent large delegations during state visits to India, fostering cooperation across sectors such as trade, science, and the economy. In the fall of 2019, India’s Minister of External Affairs, S. Jaishankar, visited Finland, followed by visits to India from Finland’s Minister for Foreign Affairs, Pekka Haavisto, and Minister of Labour, Timo Harakka. The Finnish Parliament’s Finance Committee also visited India in early 2020.

Strategic engagements in technology and innovation

Beyond trade, India and Finland have established strategic partnerships in technology, renewable energy, and research. Finnish companies excel in telecommunications, artificial intelligence (AI), and other digital solutions, and have been instrumental in advancing India’s technological landscape.

• Technological expertise: Finland’s reputation for technological innovation has been well-received in India. Finnish companies are offering solutions in telecom, IT, AI, and more.
• Sustainability focus: With a strong commitment to sustainability, Finnish companies in clean energy and eco-friendly solutions are aligning with India’s goals for green development.

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Approximately 30-40 large Finnish companies maintain a permanent presence in India, while dozens more have smaller-scale operations or trade with the country. Finnish SMEs and start-ups are still in the early stages of entering the Indian market, especially in the digital solutions space.

Meanwhile, a few Indian companies, mostly IT service providers, have established a presence in Finland, and Indian IT experts represent the largest group of foreign professionals working in Finland on short-term contracts. As both nations look ahead, trade in services—particularly in digital solutions, design, and maintenance—is expected to continue growing.

Technological collaboration in quantum computing and nuclear energy

India and Finland are also deepening cooperation in cutting-edge technologies, particularly quantum computing and nuclear energy. Discussions are underway between India’s Centre for Development of Advanced Computing (C-DAC) and Finland’s IQM Quantum Computers to advance joint research in quantum computing. In addition, Finnish universities are exploring collaborations with Indian institutions in quantum technology research.

Another area of focus is nuclear energy, where Finland’s expertise in small nuclear reactors could contribute to India’s clean energy goals. These small reactors offer lower costs and faster construction times, aligning with India’s plans to replace aging thermal plants and transition to cleaner energy.

Emerging sectors of collaboration

Finland and India have identified key sectors for cooperation, including vocational training, cybersecurity, space exploration, environmental sustainability, and digitalization. Notably, Indian specialists have contributed significantly to Finland’s ICT sector. Additionally, there has been a rise in Indian tourists visiting Finland.

Trade and economic ties

In terms of trade, Finland’s traditional exports to India include paper, machinery, and industrial services, while Finnish companies have also been active in India’s telecommunications, energy, construction, and heavy industry sectors. Finnish companies in India also engage in research and development, particularly in digital solutions. India’s exports to Finland mainly include pharmaceuticals, chemicals, textiles, and ICT services. Trade between the two countries amounts to roughly €1.5–2 billion annually, with Finland enjoying a trade surplus in goods but also benefiting from the substantial local production in India, which includes Finnish-made telecommunications networks, power plants, and digital solutions.

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

Important bilateral commercial agreements signed between India and Finland

• Agreement on Avoidance of Double Taxation (1983); amended January 2010.
• Air Services Agreement between Civil Aviation authorities signed 1995, MoU signed 8 December 2016
• Agreement for Cooperation in Science & Technology in 2008 (DST, India).
• Social Security Agreement signed June 2012 ratified June 2012, implemented from August 2014.
• MoU cooperation in Renewable Energy October 2014 (Ministry of New and Renewable Energy India).
• MoU cooperation in Biotechnology October 2014; renewed November 2018 (Department of Biotechnology India)
• MOU between Department of Biotechnology, India and Business Finland, 30 November 2018
• MOU for Cooperation in Peaceful Uses of Outer Space, 10 January 2019 (Department of Space, India)
• MOU between National Skill Development Corporation, India and EDUFI, Finland for cooperation in Vocational Education Training, January 2019
• MOU for R&D Cooperation August 2019 (Department of Science and Technology, India)
• MOU for cooperation in Tourism November 2019 (Ministry of Tourism, India)
• Joint Declaration of Intent between Ministry of Electronics and Information Technology, India and Ministry of Economic Affairs and Employment, Finland for Cooperation in Digitalization, November 2019
• MOU for Cooperation in Defense Procurement January 2020 (Ministry of Defense, India)

Market potential and sectoral opportunities

India presents a dynamic market landscape with vast business opportunities across various sectors. Finnish companies are finding opportunities in technology, renewable energy, healthcare, and education. India’s export offerings include electronics, mineral fuels, pharmaceuticals, machinery, chemicals, textiles, and metals, while Finland’s exports to India consist mainly of machinery, paper products, iron, steel, and automobiles.

India-Finland Double Taxation Avoidance Agreement (DTAA)

The India-Finland Double Taxation Avoidance Agreement (DTAA), first signed in 1983 and amended in 2010, is designed to prevent the double taxation of income earned by residents of India and Finland. The agreement ensures that individuals and companies who are residents of either country do not pay tax on the same income in both jurisdictions.

Source: India Briefing

Key sectors for Finnish companies in India

1. Technology and innovation: India’s growing tech ecosystem provides a perfect landscape for Finnish tech companies to collaborate with Indian firms and offer specialized digital solutions.
2. Healthcare and life sciences: Finland’s advanced healthcare systems can complement India’s rapidly transforming healthcare sector, particularly in medical research and infrastructure development.
3. Renewable energy: Finland’s expertise in clean energy aligns with India’s focus on renewable energy projects, creating opportunities in sectors such as wind energy and sustainable infrastructure.

Moving forward, both countries aim to enhance cooperation in areas like clean energy, climate action, and talent exchange, with the upcoming India-NORDIC Summit serving as a key platform for future collaborations and shared goals for a sustainable future.

Conclusion

India presents abundant business opportunities for Finnish companies. Strong diplomatic ties, rising trade relations, and complementary strengths in technology, healthcare, and renewable energy offer a conducive environment for growth. As both nations deepen their partnership, the potential for mutually beneficial ventures will continue to expand, contributing positively to global economic cooperation.

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