Profiling India-Italy Trade and Commercial Relations

Trade, commercial, and strategic relations between India and Italy have strengthened significantly in recent years. During the G7 Summit on June 13, 2024, Italian Prime Minister Giorgia Meloni and Indian Prime Minister Narendra Modi discussed prospects for bolstering defense ties, expanding trade and investments, combating terrorism, and addressing concerns in the Indo-Pacific region.

India and Italy are actively engaged in joint ventures, research and development, technology transfer, clean technology, renewable energy, ICT, healthcare, aerospace, education, and cultural heritage. Italy, a key member of the European Union (EU) and a major trade partner of India, has over 600 companies operating in India, employing around 60,000 people, with a total turnover of 9.7 billion euros.

Multilateral cooperation

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Italy collaborates with India in various international forums, including the International Court of Justice, UNESCO, and the International Maritime Organization. Additionally, Italy has joined several India-led global initiatives, such as the International Solar Alliance (ISA), Coalition for Disaster Resilient Infrastructure (CDRI), Indo-Pacific Ocean Initiative (IPOI), Global Bio-Fuels Alliance (GBA), and the India Middle East Europe Economic Corridor (IMEEC), indicating a growing alignment on key global issues.

India-Italy DTAA

The Double Taxation Avoidance Agreement (DTAA) between India and Italy outlines the withholding tax rates on various types of income, such as interest, royalties, technical service fees, and more. The applicable tax rates are as follows:

• Dividends: 15 percent or 25 percent (depending on the specific circumstances)
• Interest: 15 percent
• Royalties: 20 percent
• Fees for technical services: 20 percent

India-Italy trade relations

Italy is India’s fourth-largest trading partner in the EU. Indian exports to Italy include organic products, clothing, pharmaceuticals, and automotive parts. Indian companies in Italy operate in IT, electronics, and engineering sectors, while over 600 Italian companies are active in India, spanning diverse industries.

Source: Department of Commerce, Ministry of Commerce and Industry

Source: Department of Commerce, Ministry of Commerce and Industry

Source: Department of Commerce, Ministry of Commerce and Industry

India-Italy FDI

Foreign Direct Investment (FDI) from Italy into India is substantial, with significant investments in the automobile, food processing, and textile sectors. The Joint Economic Commission has facilitated economic cooperation, with the 21st session held virtually in July 2021.

Source: Ministero dello Sviluppo Economico (MISE)

Sectoral agreements between India and Italy

1. MoU signed between Cassa Depositi Prestiti (CDP) and National Infrastructure Investment Fund (NIIF)
2. MoU between India and Italy on Cooperation in the field of Industrial Property Rights
3. MoU among the Indian Institute of Technology (Kanpur), Ca’ Foscari University of Venice, Archaeological Survey of India (ASI) and Soprintendenza Archeologica Belle Arti e Paesaggio di Venezia on creating network and sharing skills for restoration and protection of monuments.
4. Addendum to the Executive Protocol for Scientific and Technological Cooperation between Italy and India on industrial projects;
5. MoU between Fincantieri S.p.A., Italy and Cochin Shipyard Limited, India on design, shipbuilding and manufacturing.
6. MoU between Fincantieri S.p.A., Italy and Cochin Shipyard Limited, India on repair/refit.
7. Cooperation Agreement to promote energy transition between Snam S.p.A., Italy and Adani Enterprises Ltd, India.
8. Cooperation Agreement to set-up a CNG compressors factory in India between Snam S.p.A., Italy and Adani Gas Ltd, India.
9. MoU to enhance the development of green hydrogen between Snam S.p.A., Italy and Greenko Energies Private Ltd, India.
10. MoU to promote energy transition and cooperate on gas infrastructures development between Snam S.p.A., Italy and Indian Oil Corporation Ltd. India.
11. MoU in conversion of plastic recycling between NextChem (Maire Tecnimont Group), Italy and Indian Oil Cooperation, India.
12. MoU on the fisheries sector between ASSOITTICA of Italy and Seafood Exporters Association of India.
13. India-Italy Joint Working Group on Food Processing (JWGFP): Formed in December 2017, the JWGFP held its first meeting on February 27, 2019. This group aims to evaluate potential complementarities in the food processing systems of both countries and identify specific sectors for concrete bilateral projects.
14. A 2003 agreement on Science and Technology cooperation facilitates joint research in areas such as electronics, biotechnology, and renewable energy. The first India-Italy Innovation Day was held in 2021. According to industry reports and business assessments, Italian industries are seeking partnerships with India in sectors such as food processing, alternative energy, clean water technologies, waste management, fashion design, luxury goods, innovation, and start-ups.

India-Italy cooperation in the start-up sector

In 2023, India and Italy agreed to enhance cooperation in areas such as renewable energy, green hydrogen, IT, semiconductors, space, and telecommunications, with a focus on strengthening economic ties. During her two-day visit to India that year, Italian Prime Minister Giorgia Meloni expressed Italy’s desire to deepen its relationship with India, noting that bilateral trade had reached 50 billion euros.

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The Prime Ministers of both countries announced the creation of a ‘startup bridge’ between India and Italy. Prime Minister Modi emphasized that new opportunities are emerging in co-production and co-development sectors, such as renewable energy, green hydrogen, semiconductors, telecom, and space, which could benefit both nations.

India-Italy business reach

For Italy, key sectors of focus include food processing, textiles, design, manufacturing, and financial services. As of FY 2022-23, Indian investments in Italy were estimated at around US$400 million, with Indian companies active in IT, pharmaceuticals, electronics, manufacturing, and engineering. Some of the major Indian companies in Italy are:

• Titagargh Industries
• Tata consultancy services (TCS)
• Mahindra
• Ranbaxy
• Bombay Rayon
• Zydus Cadila
• Reddy’s Laboratories
• Aurobindo Pharma Italia
• Himatsingka Seide
• Varroc Group
• Endurance Technologies
• Gammon
• ABG Group
• Aditya Birla
• Raymond Zambaiti
• Sun Pharma

Some prominent Italian companies in India

• Ferrero, one of the largest confectionery companies in the world, came to India in 2004 and have two manufacturing units in the western state of Maharashtra. Their products—Kinder Joy and Tic Tac—are manufactured locally in India and exported to neighboring Asian countries.
• CNH, an Italian capital goods firm, has an Indian plant located in Pithampur, Madhya Pradesh. This unit has been certified at the Bronze Level in the World Class Manufacturing (WCM) program—one of the global manufacturing industry’s highest standards for the integrated management of manufacturing plants and processes.
• Fiat, the automobile giant, entered the Indian market in 1997 and established operations in Pune, Maharashtra. In 2007, they formed a joint venture with Tata Motors. Today, Fiat ranks as the 9th largest car manufacturer in India. Some of the models produced in India include the Linea Facelift, Punto Evo, and Avventura.
• Enel, a multinational energy company, operates three plants in India, located in the states of Gujarat, Maharashtra, and Rajasthan. In June 2020, Enel secured its first Indian solar tender, signing a 25-year energy supply contract. This project, which involves an investment of USD 180 million, is proposed to be located in Rajasthan.
• Perfetti, one of the largest manufacturers and distributors of confectionery and chewing gum, operates three manufacturing plants and four sales offices in India, with its products available in 4 million outlets across the country.

Conclusion

The evolving partnership between India and Italy highlights a robust bilateral relationship marked by significant collaboration across various sectors. From expanding trade and investment to fostering technological cooperation and multilateral engagement, both nations have strategically positioned themselves as key allies. Joint ventures in renewable energy, defense, ICT, and cultural exchanges further underscore their commitment to shared global goals. As India and Italy continue to strengthen their ties, the future looks promising for enhanced economic growth, innovation, and mutual prosperity.

(US$1 = INR83.95)

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