India-Sweden Bilateral Trade and Investment

India and Sweden see significant potential for collaboration in areas like green technologies, renewable energy, smart infrastructure, healthcare, and defense. The Joint Economic Commission (JEC) remains the primary institutional platform for government-to-government dialogue between the two nations.

India-Sweden bilateral trade

India and Sweden’s bilateral relationship is underpinned by robust economic ties, expanding trade, and increasing two-way investments.

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In 2022, Swedish exports of goods to India totaled approximately US$1.62 billion (SEK 17.3 billion). While trade between the two countries fluctuated during the pandemic, 2021 saw a strong recovery, with Swedish exports to India increasing by 50 percent and imports from India rising by 43 percent in 2022. Sweden’s imports from India amounted to US$1.14 billion (SEK 12.15 billion), with the major imports being chemicals, clothing, and manufactured goods. Furthermore, Swedish services imports from India in 2021 were valued at approximately US$2.1 billion (SEK 22.3 billion).

By June 2024, India exported goods worth US$104 million to Sweden and imported US$171 million, resulting in a trade deficit of US$66.6 million. Compared to June 2023, India’s exports to Sweden grew by US$32.4 million (45.2 percent), while imports from Sweden increased by US$30.3 million (21.6 percent).

Key exports from India to Sweden (June 2024):

• Ready-made garments of cotton: US$8.82 million
• Electric machinery and equipment: US$5.31 million
• Auto components/parts: US$5.22 million
• Products of iron and steel: US$3.9 million
• Ready-made garments of other textile materials: US$3.84 million

Key imports from Sweden to India (June 2024):

• Iron and steel: US$22.8 million
• Pulp and waste paper: US$16.3 million
• Paper, paperboard, and products: US$12.3 million
• Auto components/parts: US$11.3 million
• Industrial machinery for dairy and other sectors: US$9.19 million

Growth highlights (June 2024):

• India’s export growth to Sweden was driven by significant increases in electric machinery and equipment (+107 percent), aluminum and its products (+196 percent), and optical items (+229 percent).
• India’s import growth from Sweden was fueled by sharp increases in iron and steel (+81.6 percent), pulp and waste paper (+88.6 percent), and paper and paper products (+164 percent).

Source: Trading Economics

Source: Trading Economics

India-Sweden investment relations

Sweden ranks as the 21st largest investor in India, with cumulative FDI inflows amounting to US$2.51 billion from April 2000 to March 2024. Key sectors attracting Swedish FDI include automobiles, industrial machinery, engineering, electrical equipment, and metallurgical industries.

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Sweden’s investment history in India dates to the early 20th century, with companies like Ericsson and SKF making early inroads. Today, more than 260 Swedish companies operate in India, including major multinationals such as ABB, Volvo, AstraZeneca, Atlas Copco, and Sandvik. These companies are active across diverse sectors—ranging from marketing and R&D to manufacturing and services—and collectively employ approximately 220,000 people in India. The Swedish business footprint spans industries such as automotive, healthcare, pharmaceuticals, retail, IT, and energy.

In terms of trade and investment agreements, Sweden and India signed a treaty on avoiding double taxation and preventing tax evasion in 1997, which was later amended in 2013. Additionally, as a member of the WTO since 1995, India is part of its multilateral trade agreements. The EU and India have been negotiating a free trade agreement since 2007, further signaling ongoing efforts to strengthen bilateral trade and investment relations.

Source: MEA

Indian companies in Sweden:

• Larsen & Toubro Infotech: L&T Technology Services has been the engineering partner of choice for several major brands in the Nordic region for over a decade
• HCL Technologies
• Wipro Technologies
• Tech Mahindra
• Tata Consultancy Services

Bilateral agreements between India and Sweden

India and Sweden have established a range of bilateral agreements across various fields of cooperation. Key agreements include the Exemption from Visa Requirements for Diplomatic Passport Holders (June 2015), which simplifies diplomatic travel between the two nations, and a Letter of Intent on Mutual Collaboration in Polar and Ocean Research (June 2015), reflecting a shared commitment to advancing scientific research.

In the realm of sustainable development, a Memorandum of Understanding (MoU) on Sustainable Urban Development was signed in June 2015, promoting eco-friendly urban initiatives. Both countries have also committed to fostering Micro, Small, and Medium Enterprises (MSMEs), formalized through another MoU signed the same year.

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Other notable agreements include the Protocol for Amending the Convention on Double Taxation (January 2013) and the Agreement on Social Security (November 2012), which enhance financial and legal cooperation between India and Sweden. Additionally, the Agreement on Employment for Family Members of Diplomats (November 2012) allows family members of diplomats to work in the host country, strengthening diplomatic relations.

Double Taxation Avoidance Agreement (DTAA)

The India-Sweden Agreement for the Avoidance of Double Taxation, signed in Stockholm on July 30, 1958, prevents businesses and individuals from being taxed on the same income in both countries, promoting smoother economic relations and reducing financial burdens.

Key provisions:

• The treaty applies to income taxes in both India and Sweden, ensuring that profits, royalties, dividends, and interest are taxed in the country of origin or residence.
• It addresses tax liabilities for capital gains, immovable property, and aircraft operations based on location.
• Information-sharing mechanisms between tax authorities facilitate cooperation, while tax relief is provided to avoid double taxation, with credits allowed for taxes paid in the other country.
• The agreement outlines specific tax rules for remuneration, pensions, and annuities based on residency.

The geopolitical context

India and Sweden have evolved from neutrality to adopting pragmatic, multi-aligned foreign policies, reflecting global geopolitical shifts. Sweden, once known for its neutrality, pivoted by joining the European Union in 1995, applying for NATO membership, and aligning itself with the Indo-Pacific region. Similarly, India has moved beyond traditional non-alignment, strategically balancing China’s influence through a multi-aligned foreign policy that prioritizes national interests.

Sweden’s growing engagement with India is part of a broader strategy to enhance cooperation with like-minded nations in response to these shifts. Russia’s invasion of Ukraine cemented Sweden’s and Finland’s decisions to join NATO, reshaping the European security landscape. Concurrently, Sweden has adopted a more critical stance toward China due to concerns over China’s influence on the rules-based global order. Meanwhile, India continues to diversify its global relationships—maintaining ties with Russia while strengthening its connections with Western nations.

Outlook

There is significant scope for the bilateral relationship between India and Sweden to deepen further as both countries continue to leverage mutual strengths in trade, investment, and technology.

The evolving geopolitical landscape, shared values, and collaborative approach toward sustainability, innovation, and economic growth lay the foundation for strong partnerships.

• Business opportunities: India is Sweden’s third-largest trading partner in Asia, and Indian government initiatives to ease FDI are creating opportunities for Swedish small and medium enterprises.
• Collaboration: Multiple MoUs have been signed between the two countries in areas such as health, science, energy, environment, defense, space, and MSMEs.
• Industry-start-up collaboration: There are promising opportunities for co-inventing and designing innovative solutions between industries and startups.
• India-EU FTA: Both countries emphasize the need for the early conclusion of a mutually beneficial India-EU Free Trade Agreement.

Additionally, the Make in India 2.0 initiative and Sweden’s leadership in green technologies could open new avenues for commercial and IP collaboration. Swedish companies are already playing a significant role in India’s manufacturing, IT, and energy sectors, and future trade deals are likely to promote circular economy initiatives and bolster both countries’ efforts in sustainable development.

As both nations continue to align their interests, their partnership could play a pivotal role in addressing global challenges and creating sustainable economic growth model.

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