India-Portugal: Bilateral Trade and Investment Profile

India and Portugal have a strategic partnership that’s driving growth in trade, investment, and innovation, with emerging opportunities in renewable energy, technology, and infrastructure, making them valuable gateways to Asian and European markets.

India and Portugal share a robust and growing relationship, built on a foundation of historical ties and shared political goodwill. Over the years, the two nations have strengthened their diplomatic, economic, and strategic cooperation through various high-level exchanges and bilateral agreements. Trade and investment have seen significant growth, with key sectors such as renewable energy, technology, infrastructure, and defense driving collaborations. As both countries continue to leverage their unique strengths, the India-Portugal partnership presents vast opportunities for expanding into wider global markets, fostering innovation, and deepening economic ties.

Diplomatic ties

India and Portugal enjoy a strong and amicable political relationship. Portugal has supported India’s bid for permanent membership in the United Nations Security Council (UNSC) and was instrumental in initiating the first India-EU Summit in 2000 under then-Prime Minister Antonio Guterres. Numerous high-level exchanges have taken place, such as visits by Prime Ministers António Costa and Narendra Modi, resulting in the signing of multiple Memorandums of Understanding (MoUs) in key sectors like defense, space, trade, and technology.

In 2017, PM Costa, the first Indian-origin Western head of government, visited India and signed eight MoUs. That same year, PM Modi visited Portugal, leading to the signing of 11 MoUs. Other notable engagements include PM Costa’s participation in a Gandhi anniversary event in 2019, and Portuguese President Marcelo Rebelo de Sousa’s 2020 visit to India, which culminated in 32 MoUs.

Ministerial-level visits continued in 2021 and 2022, focusing on deepening bilateral relations, ocean conservation, and green technology. Both countries support each other in multilateral fora, such as UNSC candidacies. In 2021, India became an associate observer of the Community of Portuguese Language Countries (CPLP). That same year, under Portugal’s EU Presidency, the first full-fledged India-EU leadership summit took place, addressing critical issues such as health, climate change, and pandemic preparedness.

Economic trade and cooperation

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Economic cooperation between India and Portugal has broadened significantly in key areas such as renewable energy (solar and wind), infrastructure, IT, defense, textiles, tourism, and agriculture. Both nations also collaborate on startups, water management, and food processing. A Joint Economic Committee, operating at the ministerial level, oversees these initiatives, with the 5th meeting held in New Delhi in 2021.

Bilateral Joint Working Groups have been established to address specific areas including IT & Electronics, Renewable Energy, Defense, and Agriculture. The Portugal-India Business Hub plays a pivotal role in strengthening business ties, particularly in technology, construction, and hospitality. These growing partnerships reflect mutual economic interests, laying the groundwork for further collaboration in emerging industries such as green technology and defense.

Bilateral trade

According to Government of India data, India-Portugal trade reached US$1,201.41 million in FY 2022-23, with Indian exports accounting for US$1,005.41 million and Portuguese exports for US$196 million. India maintained a positive trade balance, exporting goods worth US$72.2 million while importing goods valued at US$15.5 million.

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India’s exports to Portugal experienced a 40.4 percent decline compared to June 2023, with imports also decreasing by 2.59 percent. Major Indian exports included petroleum products (US$61.3 million), cotton yarn (US$9.84 million), and iron and steel (US$7.76 million). Key imports from Portugal were paper products (US$2.52 million), iron and steel (US$1.12 million), and bulk drugs (US$1.08 million).

The drop in India’s exports was driven by decreases in cotton yarn (-US$16.5 million), organic chemicals (-US$8.4 million), and plastic raw materials (-US$3.97 million). Imports from Portugal also fell in other commodities (-US$1.16 million), industrial machinery (-US$674k), and plastic raw materials (-US$389k).

Top traded items: India and Portugal

Source: Trading Economics

Source: Trading Economics

Source: Trading Economics

Investment flow

Portugal, with its favorable business environment, low labor costs, and well-developed infrastructure, is emerging as a strategic partner and gateway to the European market for Indian businesses. The country’s strong connections to Portuguese-speaking markets like Brazil, Mozambique, and Angola further enhance its appeal. Portugal’s efforts to simplify tax procedures, labor laws, and infrastructure, along with the Golden Visa program, make it an attractive destination for Indian investments.

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Portugal ranks 51st in foreign direct investment (FDI) inflows into India, with total cumulative FDI reaching US$120.91 million from 2000 to 2022. Notable Portuguese companies operating in India include Visabeira, Vision-Box, Portind Shoe Accessories, Martifer, Efacec, and the Petrotec Group.

Indian investments in Portugal are estimated at up to US$450 million, with major contributors like Generis (Aurobindo Pharma), MGM Group, Sugee Group, Mahindra, WIPRO, HCL, TCS, and Zomato leading the charge. Key sectors for growth include infrastructure, renewable energy, footwear, textiles, tourism, defense, IT, water management, and agriculture. The Portugal-India Business Hub supports these bilateral business initiatives.

Portuguese companies in India

A few Portuguese companies operating in India include:

• Visabeira: A key Portuguese conglomerate.
• Vision-Box: A technology solutions provider.
• Portind Shoe Accessories: Ancillary of Portuguese footwear manufacturer Soprefa.
• Martifer: A metals and engineering company.
• Efacec: An industrial machinery and equipment manufacturer.
• Petrotec Group: A retail petroleum and oil distribution company.

Indian companies in Portugal

Notable Indian companies operating in Portugal include:

1. Aurobindo Pharma (Generis) – A key player in the pharmaceutical industry, operating through its subsidiary, Generis.
2. MGM Group – Engaged in the hospitality sector.
3. Sugee Group – A real estate development company.
4. Mahindra – Active in the automotive and technology sectors.
5. WIPRO – A global IT services provider.
6. HCL Technologies – Offering digital solutions and IT services.
7. TCS (Tata Consultancy Services) – A global IT and consulting firm.
8. Zomato – A food delivery and restaurant aggregator platform.

These companies represent sectors such as pharmaceuticals, hospitality, real estate, IT, and technology.

India-Portugal Startup Hub

The India-Portugal Startup Hub, established in 2020, serves as a platform to facilitate collaboration and innovation between startups, investors, and entrepreneurs from both countries.

List of bilateral agreements and MoUs between India and Portugal

1. Bilateral Agreement on Trade, Economic, Industrial, and Technical Cooperation (1977).
2. Agreement for Cooperation in Science and Technology (1998).
3. Agreement between the Confederation of Indian Industry (CII) and the Portuguese Association of Industries (AIP) (2007).
4. Treaty of Extradition (January 2007).
5. Agreement on Social Security Convention (2013).
6. MoU for the establishment of Nalanda University (October 2015).
7. Agreement on gainful employment of diplomatic spouses (2016).
8. MoU on Civil Aviation (2016).
9. MoU on Marine Research and Resources (2017).
10. MoU on Cooperation in IT and Electronics (2017).
11. MoU on Renewable Energy (2017).
12. Visa waiver agreement for diplomatic passport holders (2017).
13. MoU on Defense Cooperation (2017).
14. MoU between Invest India and Startup Portugal on Startup Partnerships (2017).
15. MoU on Agriculture and Allied Sectors (2017).
16. MoU for establishing the ICCR Chair at the University of Lisbon (2017).
17. Protocol of Cooperation in Archival Conservation (2017).
18. MoU between FICCI and CCIP on the India-Portugal Joint Business Council (2017).
19. MoU on Cooperation in Outer Space (2017).
20. Protocol on Amending the Double Taxation Avoidance Agreement (DTAA) (2017).

These agreements strengthen the framework for trade, technology, and cultural exchange between the two nations.

India-Portugal DTAA

Article 23 of the India-Portugal Double Taxation Agreement (DTAA) outlines the elimination of double taxation for residents of both countries:

1. Taxation in each country will follow its respective tax laws unless otherwise stated in the DTAA.
2. For Portugal: When a Portuguese resident earns income taxable in India, Portugal will allow a deduction equivalent to the tax paid in India, but not exceeding Portuguese taxes on the same income.
3. For India: When an Indian resident earns income taxable in Portugal, India will allow a deduction equal to the tax paid in Portugal, up to the amount of Indian tax on that income.
4. Exempt income in one country may still be considered when calculating taxes on remaining income in that country.
5. Taxes on dividends, interest, royalties, and business profits are subject to special considerations for the first seven years of the DTAA, with potential extensions by mutual agreement.

Outlook

The future of India-Portugal relations is bright, particularly in trade, investment, and strategic cooperation. With a foundation rooted in political goodwill and historical ties, both countries are well-positioned to deepen their economic engagements. As global dynamics shift, the India-Portugal partnership can serve as a gateway to wider markets—India into Europe and Portugal into Asia.

Portugal’s strategic location within the EU, its post-Brexit advantages, low labor costs, and favorable business environment make it an ideal destination for Indian companies looking to establish a European presence. Conversely, India’s expanding economy and focus on sectors like IT, renewable energy, and manufacturing provide ample opportunities for Portuguese businesses.

Key growth sectors include renewable energy, defense, technology, and infrastructure. The India-Portugal Startup Hub will further fuel innovation, encouraging cross-border ventures. Discussions around green technology, digital transformation, and sustainable development are expected to shape future agreements. By focusing on business-friendly environments, fostering innovation, and leveraging mutual strengths, the India-Portugal partnership is set to flourish, unlocking broader international opportunities and ensuring a mutually beneficial future for both nations.

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