India-Hungary Trade Relations: From Solar Energy to Green Hydrogen Initiatives

India and Hungary have been strengthening their bilateral and trade relations in recent years, with notable developments across various sectors. Trade between the two nations has grown significantly, surpassing US$1 billion for the first time in 2022. The primary reason for this trade growth is increased investments and cooperation in areas such as energy, technology, and education.

Hungarian Foreign Minister Péter Szijjártó has highlighted Hungary’s commitment to expanding ties with India, particularly through joint efforts in nuclear and solar energy. Hungary has also joined the India-led International Solar Alliance, signaling closer collaboration in green energy initiatives. 

The latest round of bilateral discussions between India and Hungary reflects the growing strategic need for both countries to actively seek enhanced trade, investment, and cooperation in key industries.

India-Hungary relations: Focus on trade, environmental policy, energy

On February 21, 2024, Hungary’s Foreign Affairs and Trade Minister, Péter Szijjártó, visited New Delhi and discussed strengthening ties between Hungary and India. He emphasized the importance of close cooperation, citing India’s growing economy and global influence. Szijjártó praised the strong relationship between the two nations, noting the rise in trade, which exceeded one billion euros in 2023.

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Meanwhile, the Hungarian minister stressed the need for a direct air connection to boost economic ties. Szijjártó also highlighted the importance of pragmatic energy solutions and rejected extreme green policies, while still supporting environmentally responsible practices.

Speaking at the India Europe Business and Sustainability Conclave, he advocated for balancing economic growth with environmental protection. Szijjártó reinforced Hungary’s commitment to strengthening its partnership with India and promoting realistic green initiatives.

Energy cooperation

In November 2023, India’s then-Minister of State for External Affairs, Meenakshi Lekhi, called for increased investment from Hungary, emphasizing green hydrogen as a potential area for collaboration. Speaking at the India-Hungary Business Forum, she highlighted India’s growing role as a production hub and invited Hungary to explore opportunities in waste management alongside green hydrogen initiatives.

Hungary’s Foreign Minister, Péter Szijjártó, has also outlined four key areas for strengthening India-Hungary ties, including energy cooperation. Hungary is building a new nuclear power plant and investing in solar energy, with a goal of 90 percent carbon-free energy by 2030. Szijjártó noted that Indian companies were the 11th largest investors in Hungary in 2022, with trade between the two countries approaching US$1 billion for the first time.

Institutional cooperation mechanisms between India and Hungary

• Foreign Office Consultations (FOC): The 9th round of FOC took place in India in 2012, while the 10th round occurred on January 19, 2021, in Budapest.
• Joint Committee on Economic Cooperation: This committee facilitates governmental discussions on economic cooperation between India and Hungary. The 6th session was held in Budapest on October 17-18, 2022, during which the cooperation protocol was reviewed and signed.
• Joint Business Council (JBC): Established in 1979 under an agreement between FICCI and the Hungarian Chamber of Commerce, the JBC aims to foster direct business connections. The most recent meeting took place in Budapest in June 2016.

Some key bilateral treaties and agreements

1. Avoidance of Double Taxation and Prevention of Fiscal Evasion (2003)
2. MoU on IT Cooperation (2003)
3. Agreement on Defence Cooperation (2003)
4. Agreement on Exemption of Visa Requirement for holders of diplomatic and official passports (2003)
5. Agreement on cooperation in the field of Health & Medicine (2008)
6. Agreement on Cooperation in the field of Agriculture and allied sectors (2008)
7. Letter of Intent on Strategic Research Fund between India and Hungary (2008)
8. MoU between Oil and Natural Gas Corp. Ltd. and MOL Hungarian Oil and Gas Plc. for Cooperation in Hydrocarbon Sector (2008)
9. Agreement on Social Security between India and Hungary (2010)
10. MoU on Traditional Systems of Medicine (2013)
11. Letter of Intent for Indo-Hungarian Strategic Research Fund (enhanced contribution of Euro 2 million each for 2014-17.
12. Education Exchange Programme signed in Budapest on 19 November 2014.
13. MOU on Cooperation in the field of Water Management – October 2016
14. MOU between the Indian Council of World Affairs and Institute of Foreign Affairs and Trade of Hungary – October 2016.
15. MoU between Council of EU Chambers of Commerce in India (CEUCCI) and the Hungarian Chamber of Commerce and Industry on 26 June 2018 in Budapest
16. Letter of Intent was signed between Automotive Component Manufacturers Association of India (ACMA) and Hungarian Automotive Component Manufacturers Association (MAJOSZ) with a view to re-energizing their cooperation on 5 February 2019 in Budapest.
17. MoU on Investment Promotion between Hungarian Investment Promotion Agency (HIPA) with Federation of Indian Chambers of Commerce and Industry (FICCI) – 27 May 2022, New Delhi
18. MoU between Invest India and Hungarian Investment Promotion Agency (HIPA) at the 5th India-Hungary Joint Commission on Economic Cooperation held on 5-6th March 2018, New Delhi. The MoU was renewed on 27 May 2022, New Delhi and signed as an MoU on enhancing bilateral investment relations.

India-Hungary trade ties

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

India-Hungary Double Tax Avoidance Agreement

The India-Hungary Double Taxation Avoidance Agreement (DTAA) was signed on March 3, 1987, to prevent the double taxation of income for individuals and businesses operating in both countries.

Source: India Briefing

The DTAA covers various forms of income, including profits from business, dividends, interest, royalties, and capital gains. The agreement aims to promote economic cooperation between India and Hungary by reducing tax barriers, encouraging cross-border investments, and preventing tax evasion.

Cross-border investments

As per the Ministry of External Affairs, India became Hungary’s largest greenfield investor in 2014 and stood as the third-largest greenfield investor in 2015. In the same year, Apollo Tyres invested €475 million to establish a tyre manufacturing plant in Hungary, with the foundation stone laid by Prime Minister Viktor Orban and Apollo Chairman Onkar Kanwar. By 2020, the investment grew to €700 million, employing over 800 people.

In 2022, HCL Technologies acquired Hungarian big data company Starschema for €36 million to bolster its data processing capabilities in Central and Eastern Europe. Mumbai-based Eurolife acquired TEVA Pharmaceutical’s Intravenous Infusion business in 2021, starting production in December 2022. As of 2022, Indian companies in Hungary provide over 10,000 jobs.

Prominent Indian companies with a presence in Hungary include Apollo Tyres, Samvardhana Motherson Group (SMG), SMR Automotive, Sun Pharmaceuticals, Orion Electronics Ltd., Sona BLW and major IT companies TCS, WIPRO, Cognizant and Tech Mahendra.

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Meanwhile, Hungary’s most significant investment in India comes from Richter Gedeon, a major Hungarian pharmaceutical company. It has invested US$20 million in a 51:49 joint venture with India’s Themis Medicare Ltd. to produce intermediates, with the entire output exported to Hungary. Efforts are underway to increase Hungarian investments in India, and a few Hungarian water and IT companies are exploring opportunities to establish operations in the country.

On June 6, 2024, it was reported that Hungary-based Wizz Air is planning to launch flights between Indian and European cities, with average one-way fares estimated to be around 200 euros. According to CEO József Váradi, the Hungary-based airline, operating for over 20 years, is currently in talks with India’s central government and regulators to begin services in the country.

Wizz Air will reportedly receive new A321 XLR planes starting in 2025, which can fly nonstop for 8 to 8.5 hours, making it possible to operate flights to India. The airline hopes to begin operations in India by the next financial year, pending regulatory approvals. It plans to connect six or seven European cities with major Indian airports.

Key takeaways

1. Growth in trade relations: India and Hungary have significantly strengthened their bilateral trade, with trade surpassing US$1 billion for the first time in 2022. Key sectors driving this growth include energy and technology.
2. Energy cooperation: Hungary is keen on expanding its collaboration with India, particularly in the areas of nuclear and solar energy. Hungary’s participation in the India-led International Solar Alliance further strengthens ties in green energy initiatives.
3. Green hydrogen and sustainable growth: Both nations have expressed interest in collaborating on green hydrogen production, alongside waste management.
4. Institutional mechanisms: Various cooperation frameworks, such as the Foreign Office Consultations, Joint Committee on Economic Cooperation, and Joint Business Council, have been established to further solidify economic and diplomatic relations.
5. Indian investments in Hungary: Indian companies have emerged as significant investors in Hungary, providing over 10,000 jobs and engaging in sectors like automotive, pharmaceuticals, and IT. Hungary, on the other hand, has very limited commercial presence in India, with some firms considering India market entry in the water and IT sectors.

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