India and the Netherlands: Trade and Investment Profile

The relationship between India and the Netherlands, which began with the spice trade several centuries ago, has evolved into a robust bilateral trade partnership, leading to extensive collaborations between the two nations across various sectors. Over the years, India has emerged as a key trade and investment partner for the Netherlands, with numerous partnerships formed with Dutch companies.

Economic and commercial relations between India and the Netherlands play a key role in Indo-Dutch relations, with businesses focusing on sectors like water management, agriculture, food processing, health, environment, transport, logistics, services, and science and technology.

The Netherlands ranks as India’s 11th largest global trading partner for merchandise and the top partner within the European Union.

Source: Ministry of Commerce and Industry

Dutch-Indian collaboration

In September 2023, Dutch Prime Minister Mark Rutte, on a visit to India, announced that the Netherlands is in talks with the India’s central and Karnataka state governments to increase Dutch involvement in the semiconductor industry in Bengaluru.

During his visit to Bengaluru after the G20 Summit in New Delhi, Rutte mentioned that discussions are also underway to better understand India’s Unified Payments Interface (UPI), focusing on issues like privacy, banking, and currency stability. He highlighted ongoing talks with Indian authorities about expanding Dutch semiconductor companies, such as NXP, in India, noting NXP’s significant R&D presence but absence of manufacturing facilities in the country.

Corporate footprints of Indian and Dutch companies

At present, there are over 300 Dutch companies operational in India, including prominent names such as Philips, Signify, Akzo Nobel, DSM, KLM, Rabobank, Heineken, TomTom, Paques, Boskalis, Van Oord, Damen Shipyards, Vopak, and Aegon.

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Similarly, over 300 Indian companies have established a presence in the Netherlands. Major IT firms like TCS, HCL, Wipro, Infosys, and Tech Mahindra are active, along with Tata Steel, Sun Pharmaceuticals, Dr. Reddy’s, Aurobindo Pharma, LT Foods, Nature Bio Foods, Solis, Mittal Steel, and United Phosphorus Limited (UPL). The headquarters of the Indian PSU, ONGC Nile Ganga B.V., is also based in the Netherlands.

Indian companies have undertaken significant acquisitions in the Netherlands, including OYO Hotels and Homes acquiring Amsterdam-based @Leisure Group, Tata Steel purchasing Anglo-Dutch Corus, Ola acquiring electric scooter maker Etergo, Apollo Tyres acquiring Dutch tyre maker Vredestein Banden, Aspire Systems acquiring Dutch-Polish software firm Goyello, and the Serum Institute of India buying Bilthoven Biologicals (BBio).

Bilateral trade overview

In FY 2023-24, total trade between the two countries reached US$27.341 billion, representing 2.46 percent of India’s overall trade. India enjoys a trade surplus of US$17.393 billion with the Netherlands.

The Netherlands has emerged as India’s third largest export destination after the US and UAE during 2023-24.

Source: Ministry of Commerce and Industry

However, the imports from the Dutch country into India has decreased from FY2022-23 to FY2023-24.

Source: Ministry of Commerce and Industry

According to the data provided by India’s Department of Commerce, the main items of Indian exports to the Netherlands include petroleum products, telecom instruments, drug formulations & biologicals, organic chemicals, RMG cotton including accessories, iron & steel, residual chemicals & allied products, electronic instruments, products of iron & steel, aluminum & products of aluminum. In FY2023-24, there was a surge in exports of arms and ammunition commodities to the Netherlands.

Source: Ministry of Commerce and Industry

Source: Ministry of Commerce and Industry

During FY2023-24, the Netherlands exported US$4.966 billion worth of goods to India, comprising 0.74 percent of India’s total imports. Major Dutch exports to India include electronic components, scientific instruments, dairy machinery, vegetable oils, plastic raw materials, and drug formulations.

Bilateral investment

The Netherlands ranked as the fifth-largest foreign investor in India during FY 2022-23, with foreign direct investment (FDI) equity inflows amounting to US$2.498 billion. From April 2000 to December 2023, the Netherlands was the fourth-largest investor in India, contributing 6.91 percent of the overall FDI, with a cumulative equity inflow of US$46.037 billion.

Source: DPIIT

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Between April 2000 and March 2024, Indian companies directed US$24.99 billion in foreign investments to the Netherlands, making it the fourth largest destination for India’s overseas direct investments (ODI), accounting for 8.30 percent of the total. In the fiscal year 2023-24, the Netherlands ranked as the fifth largest destination for ODI from India, with investments amounting to US$1,090 million.

Source: Department of Economic Affairs

India-Netherlands Double Taxation Avoidance Agreement (DTAA)

In 1989, India and the Netherlands entered a DTAA to help people avoid paying taxes twice on the same income in both countries. This agreement covers different types of taxes, including dividends and income taxes.

Source: Income Tax Department

Capital gains tax

The DTAA also covers capital gains tax. If someone sells property or assets in one country while living in the other, they may be taxed in the country where the property is located.

Profits from selling ships or aircraft used in international trade are taxed where the company’s management is based. Shares in a company that owns real estate in one country may be taxed there if the shares aren’t listed on a stock market and the seller owns at least 25 percent of the company’s shares.

High-level visits boosting trade and investment

In September 2023, Prime Minister Mark Rutte led a trade mission to Bengaluru after the G20 Summit in New Delhi. The mission included representatives from over 60 Dutch companies focusing on semiconductors, cloud computing, sustainable agriculture, and medical technologies. This resulted in the signing of 27 MoUs between Dutch and Indian stakeholders, fostering partnerships in key sectors like affordable healthcare and sustainable food systems.

In August 2023, Dutch Minister for Foreign Trade Liesje Schreinemacher participated in the G20 Trade and Investment Ministers Meeting in Jaipur, emphasizing the need for World Trade Organization reforms.

In 2022, India’s then President Ram Nath Kovind visited the Netherlands in April, promoting bilateral cooperation in sectors such as geospatial mapping, clean energy, and biomedical devices. During the visit, key agreements on maritime transport and biotechnology were extended.

Opportunities for Dutch companies in India

The Netherlands, with its advancements in technology, innovation, and infrastructure, is keen on expanding its international business footprint. As Dutch companies increasingly look to diversify beyond China, India emerges as an appealing alternative. The Netherlands, recognized globally for its leadership in sectors like agriculture, water management, ports and logistics, inland waterways, healthcare, science and technology, urban development, shipping, and renewable energy, should explore collaboration opportunities with India in these areas.

In addition to key component manufacturing, the Netherlands can benefit from tapping India’s vast pool of skilled professionals in research, design, engineering, and software development. By leveraging this talent, Dutch companies can establish a robust remote workforce in India.

Setting up a cost-effective presence in India allows Dutch businesses to seize opportunities stemming from the country’s ongoing transformation. This strategy not only drives business growth but also enables companies to scale effectively in response to market demands.

India’s semiconductor industry: Partnership with the Netherlands

India’s semiconductor industry is actively engaged toward large-scale assembly, testing, manufacturing, and packaging of the critical component. According to an HSBC report, the country’s semiconductor market is expected to grow rapidly, reaching US$64 billion by 2026, fueled by digitalization across various industries and the government’s focus on self-reliance in electronics manufacturing.

The Netherlands, home to top chipmaking companies such as ASML, NXP Semiconductors, and STMicroelectronics, could become India’s ideal partner to accelerate its semiconductor ambitions. India can benefit from the Netherlands’ technological expertise, while Dutch firms gain access to India’s rapidly expanding semiconductor market, rich in talent and ripe for research and development collaboration.

Other collaborative efforts

• Paris Agreement Goals: India and the Netherlands are working together to achieve India’s goals under the Paris Agreement, including reducing greenhouse gas emissions by 33-35 percent and producing 450 GW of non-fossil power by 2030.
• Fast-Track Mechanism (FTM): A bilateral Fast-Track Mechanism was established in September 2022 to facilitate Dutch investments in India, with the aim of boosting economic collaboration.
• Green Steel by Tata Steel: Tata Steel’s Dutch division plans to supply Ford’s European plants with ‘green’ steel starting in 2030, aligning with the global push toward sustainability.
• LyondellBasell and Shakti Plastic Joint Venture: This collaboration aims to build a fully automated recycling plant in India, processing 50,000 tonnes of plastic waste annually into recycled polyethylene and polypropylene.
• Foreign Office Consultations: The 11th Foreign Office Consultations between India and the Netherlands, held in December 2022, emphasized cooperation in water, agriculture, health, science, and climate innovation. Both sides acknowledged the importance of the Free Trade Agreement negotiations and the EU-India Connectivity Partnership as drivers of future collaboration.

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