India’s Strategic Partnership with Croatia: A Brief

Posted by Written by Archana Rao Reading Time: 5 minutes

India is diversifying its export destinations amid geopolitical shifts. Croatia is emerging as a key partner, especially for engineering goods and high-value products, highlighting a growing economic relationship.

India is diversifying its trade and investment focus, capitalizing on emerging markets amid shifting global economic dynamics. Croatia, strategically located in Europe and a member of the European Union (EU), is becoming a key market for India’s high-value engineering goods. This growing partnership presents opportunities in technology, renewable energy, pharmaceuticals, and defense. Croatia’s demographics and ports in Rijeka and Ploče make it an ideal gateway for Indian businesses expanding into Southeast and Western Europe, strengthening a two-way economic corridor.

Also Read: India’s Trade Performance in FY 2023-24 and Strategy to Explore New Export Markets

During the Yugoslav era, Croatia played a pivotal role in fostering strong ties between India and Yugoslavia. Over two-thirds of the trade between the nations was facilitated through Croatia, including major ship purchases by India in the 1970s and 1980s.

Post-independence, Croatia retained its amicable relations with India, despite its initial focus on addressing domestic ethnic conflicts and its subsequent integration into NATO (2009) and the EU (2013).

Recent governmental engagements between India and Croatia

Recent engagements between India and Croatia have strengthened bilateral ties. In March 2023, Croatian Foreign Minister Gordan Grlić Radman visited India for the Raisina Dialogue and signed a Memorandum of Understanding (MoU) on Defence Cooperation.

The 10th and 11th rounds of Foreign Office Consultations (FoC) were held in November 2022 and April 2024, respectively, to review relations and explore collaboration in trade, defense, science, technology, and culture.

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In February 2017, India’s then Commerce Minister Nirmala Sitharaman visited Croatia, leading to an agreement on economic cooperation, the renewal of the India-Croatia Joint Commission, and the establishment of the Joint Business Council.

India and Croatia bilateral trade

Bilateral trade between India and Croatia primarily involves India exporting pharmaceuticals, machinery, and textiles, while Croatia exports food products, wood, and machinery to India.

India and Croatia Trade Relations Year-on-Year (Value in US$ Million)

Trade

FY 2019-20

FY 2020-21

FY 2021-22

FY 2022-23

FY 2023-24

India’s export to

146.97

141.91

493.18

339.73

233.3

Growth %

 

-3.44

247.53

-31.11

-31.33

India’s import from

57.18

42.81

59.43

117.54

58.06

Growth %

 

-25.14

38.83

97.78

-50.6

Total

204.15

184.71

552.61

457.27

291.36

Growth %

 

-9.52

199.17

-17.25

-36.28

Source: Department of Commerce, GoI

India’s Export to Croatia (Value in US$ Million)

Commodity

FY 2022-23

FY 2023-24

 Growth %

Organic chemicals  

28.49

37.31

30.96

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers,and parts.  

8.81

20.75

135.48

Ceramic products.  

13.46

18.97

40.94

Optical, photographic cinematographic measuring, checking precision, medical or surgical inst. And apparatus parts and accessories thereof;  

7.93

18.82

137.4

Iron and steel  

13.47

14.79

9.85

Coffee, tea, mate and spices.  

8.84

10.55

19.24

Pharmaceutical products  

7.8

10.04

28.78

Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof.  

8.37

8.01

-4.31

Oil seeds and olea. Fruits; misc. Grains, seeds and fruit; industrial or medicinal plants; straw and fodder.  

4.79

7.68

60.23

Articles of apparel and clothing accessories, not knitted or crocheted.  

5.45

6.5

19.22

Rubber and articles thereof.  

4.75

5.4

13.66

Articles of iron or steel  

2.37

5.36

125.98

Tobacco and manufactured tobacco substitutes.  

9.26

5.06

-45.43

Source: Department of Commerce, GoI

India’s Imports from Croatia (Value in US$ Million)

Commodity

FY 2022-23

FY 2023-24

 Growth %

Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof.  

7.95

14.93

87.72

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers,and parts.

4.48

10

123.14

Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, or radi. Elem. Or of isotopes.  

1.18

4.11

247.21

Organic chemicals  

4.85

4.07

-16.13

Pulp of wood or of other fibrous cellulosic material; waste and scrap of paper or paperboard.  

1.47

3.7

151.68

Wood and articles of wood; wood charcoal.  

4.18

3.46

-17.05

Paper and paperboard; articles of paper pulp, of paper or of paperboard.  

0.89

1.81

103.2

Rubber and articles thereof.  

0.18

1.59

787.84

Man-made staple fibres.  

0.45

1.44

220.14

Animal or vegetable fats and oils and their cleavage products; pre. Edible fats; animal or vegetable waxes.  

0.66

1.41

114.25

Salt; sulfur; earths and stone; plastering materials, lime and cement.  

1.72

1.26

-26.99

Iron and steel  

0.53

0.96

81.48

Arms and ammunition; parts and accessories thereof.  

0.18

0.93

426.52

Source: Department of Commerce, GoI

India and Croatia Double Taxation Avoidance Agreement

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India and Croatia signed their double taxation avoidance agreement (DTAA) in 2014, aimed at promoting cross-border trade, investment, and economic cooperation. The agreement came into force on February 6, 2015 seeking to eliminate the risk of double taxation on income earned by residents of either country, ensuring that individuals and businesses are not taxed twice on the same income.

Recipient Country

Withholding Tax Rates (%) from Certain Types of Income

Croatia

Dividend

Interest

Royalty

Fee for technical services

5;15

10

10

10

Source: Income Tax Department, GoI; India Briefing

Key provisions of the DTAA include the allocation of taxing rights between the two countries, reduced withholding tax rates on dividends, interest, royalties, and fees for technical services, and mechanisms for dispute resolution to prevent tax evasion.

India-Croatia investment flows and business ties

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India and Croatia have cultivated dynamic investment flows, reflecting shared economic interests and strategic collaboration. According to a Press Note issued by the Embassy of India, Zagreb, Croatia, Indian investments in Croatia are estimated at approximately €40.05 million, predominantly focusing on key sectors such as information technology, renewable energy, and agro-industries. However, Croatian investments in India, valued at €5.55 million, target complementary sectors, including infrastructure, tourism, and defense.

Indian companies have made notable contributions to Croatia’s economy. Infosys, a leading IT firm, has strengthened its presence with an R&D center in Karlovac, employing over 100 engineers and supporting further technological advancements. Similarly, Mumbai-based pharmaceutical company ACG Worldwide’s acquisition of a capsule manufacturing company in Varaždin in 2013 positioned it as Europe’s third-largest supplier of gelatin capsules. Cipla, a major Indian pharmaceutical firm, expanded its European operations through the acquisition of Celeris, based in Zagreb, further solidifying India’s footprint in Croatia.

Croatian companies, such as Altpro, Infobip, and Končar, have actively engaged with India’s rapidly growing market.

The renewable energy sector has been a cornerstone of cooperation. In 2011, Orient Green Power invested €17.4 million in wind power plants near Šibenik, showcasing India’s commitment to sustainable energy in Croatia. Similarly, TRIVENI Turbines played a vital role in Croatia’s biomass cogeneration plant in Virovitica, integrating Indian engineering expertise into the country’s energy infrastructure.

Defense, digital initiatives, and startup ecosystem

Defense cooperation between India and Croatia advanced in 2023 with the signing of a MoU. This agreement has created pathways for joint research, development, and market access, strengthening the defense partnership.

In the digital space, the India-Croatia Startup Bridge, launched in December 2021, has become a cornerstone for connecting the entrepreneurial ecosystems of both nations. Programs such as the India-Croatia Startup Challenge have fostered innovation and collaboration, allowing Indian startups to gain recognition and market access in Croatia.

Summary

India and Croatia continue to deepen their partnership through initiatives in technology, trade, tourism, and talent. With shared aspirations and complementary strengths, the relationship holds promise for exponential growth across various sectors, strengthening the foundation for a sustainable and mutually beneficial alliance.

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