The Economic Relationship Between India and France

By Aastha Jain

India and France have cultivated a dynamic and multifaceted economic relationship, one that has significantly evolved over the past few decades. This growing partnership spans across sectors such as trade, investment, defence, and renewable energy. As India continues to rise as a global economic powerhouse and France looks to deepen its ties with key Asian economies, the bilateral relationship between these two nations offers valuable insights into the nature of contemporary international economic cooperation. This essay explores the historical roots and modern developments of this relationship, with a particular focus on trade, foreign investment, and strategic sectoral collaboration. It also examines the challenges both countries face and the emerging opportunities that could define their economic engagement in the decades to come.

The economic ties between India and France are grounded in a shared commitment to democratic values, multilateral cooperation, and mutual respect. Historically centred on defence and aerospace, the relationship has broadened over time to include a more diverse range of economic activities. In recent years, the two countries have actively worked to deepen their economic engagement through high-level dialogues, joint statements, and institutional frameworks. One of the most ambitious of these frameworks is the Indo-French Roadmap 2047, which outlines a shared vision to expand trade and investment by the centenary of diplomatic relations in 2047. This roadmap seeks to elevate economic exchanges while also encouraging collaboration in areas that align with both countries' long-term strategic interests.

Bilateral trade has emerged as one of the strongest pillars of the Indo-French economic relationship. In 2023, the total trade volume between the two nations reached approximately USD 14.3 billion, marking a significant increase over previous years. This upward trajectory reflects a growing diversification in the types of goods and services exchanged. India’s exports to France include textiles, pharmaceuticals, engineering products, gems, and jewellery, while French exports to India consist largely of high-end machinery, aircraft, luxury goods, electrical equipment, and chemicals. This balanced composition of trade signals a maturing commercial relationship supported by business forums, trade delegations, and targeted policy efforts aimed at reducing barriers to entry and improving market access. The two countries have set an ambitious goal of increasing bilateral trade to USD 25 billion by 2030, a target that reflects the shared desire to elevate their economic partnership to new heights.

France ranks among India’s most significant trading partners within the European Union, and India, in turn, has become an important player in France’s global trade network, currently standing as France’s 27th largest trading partner. These rankings underscore the growing relevance of India in France’s external economic strategy and vice versa. More than simply an exchange of goods, this relationship includes dynamic flows of capital, services, and technology.

Foreign direct investment plays a central role in the economic partnership. Between 2000 and 2023, France invested approximately USD 10.5 billion in India, making it the 11th largest foreign investor in the country. French companies have established a strong presence in India’s industrial and technological sectors, generating employment, encouraging innovation, and facilitating the transfer of advanced technologies. As of 2023, over 1,000 French firms operate in India, employing more than 300,000 people across various sectors. These include energy management, information technology, pharmaceuticals, and defence manufacturing. Firms such as Schneider Electric, Capgemini, Sanofi, and Dassault Aviation have become household names in India, and their investments go well beyond capital infusion. They represent long-term commitments to India’s economic development, often accompanied by technology-sharing arrangements and skill-building initiatives that benefit the broader ecosystem.

The bilateral relationship is particularly robust in several strategic sectors that reflect the countries’ complementary strengths. Defence and aerospace cooperation have long been at the heart of Indo-French ties. The 2016 agreement for the purchase of 36 Rafale fighter jets from Dassault Aviation marked a high point in this collaboration. Beyond such deals, France continues to support India’s naval and defence modernisation through technology transfers and joint research initiatives. Both countries have shown willingness to engage in long-term defence partnerships that go beyond the buyer-seller dynamic.

Another critical area of cooperation is renewable energy and climate change. France and India co-founded the International Solar Alliance, a global initiative that promotes solar power in developing countries. As part of its climate commitments, India has set a target of achieving 500 GW of non-fossil fuel energy capacity by 2030. France has been a strong supporter of this transition, contributing expertise, financing, and technological solutions that help scale solar and wind energy projects across the country. This area of cooperation not only aligns with global sustainability goals but also reflects the shared commitment to responsible economic growth.

The digital economy has also emerged as a promising frontier. India’s rapidly expanding tech landscape offers fertile ground for collaboration in artificial intelligence, cybersecurity, blockchain, and smart infrastructure. Several Memorandums of Understanding have been signed to facilitate joint ventures and innovation exchanges. France has demonstrated considerable interest in India's digital startups and e-commerce sectors, viewing them as engines of growth that align with its broader economic strategy in Asia.

While the economic partnership between India and France is robust and future-oriented, it is not without its challenges. Regulatory complexities, bureaucratic inefficiencies, and non-tariff barriers continue to hinder smoother trade and investment flows. Language and cultural differences can also complicate business negotiations, especially for smaller enterprises entering unfamiliar markets. However, both governments have shown a strong commitment to addressing these hurdles through reform, bilateral dialogue, and institutional support. Improvements in India’s ease of doing business and France’s openness to foreign investors are creating an environment more conducive to economic collaboration.

The opportunities for growth in this partnership are vast. Continued expansion of technological collaboration, greater joint investment in renewable energy, and deeper defence cooperation are all within reach. Additionally, increasing people-to-people exchanges through academic, cultural, and professional programmes could enrich the economic relationship by building a more interconnected knowledge economy.

India and France have built an economic partnership that is not only enduring but also adaptive to global shifts. Their growing collaboration in trade, investment, defence, and sustainable energy provides a compelling model for international economic cooperation based on mutual benefit and strategic alignment. As India rises on the global economic stage and France continues to redefine its role in Asia, their bilateral engagement is poised to shape a significant part of the 21st century’s economic architecture.

Aastha Jain is a third-year economics student at O.P. Jindal Global University. She has interned at KPMG and several policy-focused research organisations, with a strong interest in international trade, energy economics, and strategic affairs.