Country Profile: France

• GDP of France is US$ 3.05 trillion with services sector contributing more than 75% to its GDP
• France’s primary exports are machinery and transportation equipment, aerospace equipment and plastics, while primary imports include machinery, automobiles and crude oil.
• India-France bilateral trade figure stood at US$ 8.86 billion in 2018 which grew by 5.05% in past three years.
• Both countries have shared strategic interests and fairly common worldview, with growing cooperation in areas like renewable energy, nuclear power, defence cooperation and cyber security.

France’s economy is the fifth largest in the world and represents around one fifth of the Euro area in terms of gross domestic product (GDP). France is a large country in Europe, which shares its border with both the Mediterranean Sea and the Atlantic Ocean.

Currently, services are the main contributor to the country’s economy, with over 75% of France’s GDP stemming from this sector. In manufacturing, France is one of the global leaders in the aerospace, automotive and railway sectors as well as in cosmetics and luxury goods. Furthermore, France has a highly educated labour force and the highest number of science graduates per thousand workers in Europe.

France’s unemployment rate dipped slightly in the second quarter to 8.5%, its lowest level in a decade. Fiscal policy needs to address this worrying issue which is currently enervating French economy modestly.

Kaleidoscopic Glimpse of France

• More than 350 kinds of cheese are made in France
• France is famous for cheese (Camembert, Brie, Roquefort) wine, perfume (Chanel, Dior, Givenchy) and cars (Renault, Citroen, Peugeot).
• France is also famous for the Tour de France and the Eiffel.
• Symbols such as the Eiffel Tower, the Louvre, the Cathedral of Notre Dame, the Latin Quarter, Montmartre, and the Georges Pompidou Centre make Paris one of the most visited places in the world.
• France’s highest mountain ranges are the French Alps and Jura Mountains, bordering Italy and Switzerland, and the Pyrénées, along the frontier with Spain.
• The highest mountain is Mont Blanc in the French Alps. It rises to 4,807m (15,771 ft). Mount Blanc is also the highest peak in the whole of Europe.

Macroeconomic Outlook of France

The economy has been growing sluggishly this year as lacklustre growth across the Eurozone, protracted Brexit-related anxieties, high unemployment rate and global trade tensions hit the external sector. That said, household spending should cushion the slowdown, as tax cuts and a tighter labor market boost consumers’ purchasing power. Fiscal slippage remains a concern, however. Analysts see growth at around 1.3% this year, which is unchanged from last month’s forecast, and at 1.3% again next year.

In the external sector, France’s largest trading partner is Germany, which accounts for more than 17% of France’s exports and 19% of total imports. France’s primary exports are machinery and transportation equipment, aerospace equipment and plastics, while primary imports include machinery, automobiles and crude oil. Additionally, France is the most visited country in the world, making tourism a prominent sector in the economy. Other key exported services include business services and transportation

France has an export-to-GDP ratio of close to 30%. The country’s highest goods exports in terms of dollar value include machinery, aircraft and spacecraft, vehicles, electronic equipment and pharmaceutical products. France is also one of the world’s largest exporters of farm and agricultural products and is popular for its wine, spirits and cheeses. The French government provides significant subsidies to this sector and France is the largest exporter of farm products in Europe.

Trade Flows of France

Source: ITC Trade Map

A majority of France’s exports are to European nations, with only around one-third of all exports going to economies outside Europe. France exports the largest amount of goods and services to Germany, followed by Spain, Italy, Belgium, and the UK. Outside of the European Union, US is the largest destination for French exports.

Trade basket of France

Source: ITC Trade Map, 2019

Export and Import Partners of France

Source: ITC Trade Map, 2019

India-France: Trade & Investment

Source: ITC Trade Map

India-France bilateral trade figure stood at US$ 8.86 billion in 2018, which has grown by 5.05% in the past three years. Major products India exported to France included prepared petroleum products, parts of aircrafts, pharmaceuticals, garments, footwear, accessories of automobiles, insecticides, optical fibres and static convertors. On the other hand, Indian imports from France includes petroleum gas and hydrocarbons, powered helicopters and aeroplanes, human and animal blood, turbojets, turbopropellers, monitors and projectors, telephone sets etc.

France has emerged as a major source of FDI for India with more than 1,000 French establishments already present in India. France is the 9th largest foreign investor in India with a cumulative investment of US$ 6.76 billion from April 2000 to June 2019, which represents 1.55% of the total FDI inflows into India, according to statistics provided by the DPIIT. The highest FDI equity inflows are in the services sector (19.30%), with cement & gypsum products (15.59%) in second place, followed by drugs & pharmaceuticals (5.23%), industrial machinery (5.04%) and food processing industries (5.03%).

Most big French corporate groups have their subsidiaries in India. However, there are a few joint ventures and liaison offices of French companies in India. French companies are present in a wide range of sectors: services (BNP Paribas, Capgemini, Havas, Sodexo, etc.); pharmaceutical-chemical (Arkema, L’Oréal, Sanofi, Total, etc.); aerospace (Airbus, Dassault, Euro copter, Safran, Thales, etc.); agro-food (Bongrain, Danone, Lactalis, Lesaffre, Pernod Ricard, etc

There are over 150 Indian companies operating in France (including sub-subsidiaries), employing around 7,000 people. Indian investment in France has come in different sectors such as pharmaceuticals (Sun Pharma & Wockhardt), ITeS (Infosys, Tata Consultancy Services & Wipro), wine (Kingfisher), steel (Electrosteel & Tata Steel), plastics (Sintex Industries), railway wagons (Titagarh Wagons), aerospace (Cades and Axis Aerospace & Technologies), Auto Parts (Jyoti), Two-wheelers (Mahindra&Mahindra), Metal Forging (Bharat Forge).

Tata Group (ITeS & metallurgy) with a workforce of 1,500, Sintex Industries (chemicals & plastics) with 1,000-1,500 employees, Motherson Sumi Systems (automotive) with a workforce of 400-500, Centum India (electrical, electronic & IT equipment) with the same number of employees and Mahindra & Mahindra (automotive) with 400-500 employees are the five largest Indian employers in France.

Composition of India-France Trade in Services (in million €)

Source: French Central Bank, 2018

Both countries have admitted to bilateral trade being significantly below potential. According to ITC Trade Map, India has untapped potential for exports to France of around US$ 5 billion, led by shrimps and prawns, frozen (US$ 343 million), diamonds, worked (US$ 352 million), medicaments (US$ 270.2 million) and jewellery of precious metal (US$ 292.4 million).

Both countries have expressed their commitment to relaunch the Indo-EU Broad-Based Trade & Investment Agreement (BTIA) last year. The deal was being negotiated to bring down tariffs and boost bilateral trade and investment in goods and services. However, the same was stalled due to differences in areas like intellectual property rights and duty cuts on products like spirits and automobiles. Both countries have identified several areas of common strategic interest in areas like defence, nuclear energy, renewable energy and cyber security. Both India and France can look to leverage their mutual friendship to enhance their strategic reach in EU and Asia respectively.