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France-India Trade: Opportunities and Challenges

By Antoine Faugeres

Read Time

By Antoine Faugeres

Read Time

A strategic relationship between France and India for France-India Trade

The importance of the relationship between France and India for France-India Trade was made clear by the recent meeting in Paris between Emmanuel Macron, President of France, and the Indian Prime Minister, Narenda Modi. The Indian Prime Minister was the guest of honour at the July 14 parade.

Emmanuel Macron and Narenda Modi meetings aim to set new objectives for the Franco-Indian strategic partnership which is celebrating its 25th anniversary (particularly in the field of military equipment and satellites).

France-India trade

The Defence Sector
In defence, India is seeking to beef up its military capabilities and is negotiating an order for 26 Rafale Marine aircrafts from Dassault.  These aircrafts are intended for the “INS Vikrant”, the brand-new aircraft carrier made in India and will allow India to strengthen its projection capabilities in the Indian Ocean. The Indian army has already ordered 36 Rafales from Dassault.

India could also order three Scorpene-class submarines from the French Naval Group. Six vessels of this type have already been built on Indian soil in partnership with the French manufacturer.

Emmanuel Macron and Narendra Modi will also discuss the agreement between Safran and Hindustan Aeronautics Limited (HAL) for the co-development of an engine for the future Indian fighter plane.

France-India Trade: Main products traded (% share – cumulative over the last 12 months)
French exports: Aeronautics (47.5%), Chemical products (9.5%), Machinery and equipment (7%), Electrical material (6.5%), Pharmaceutical products (3%)

French imports: Petroleum products (18%), clothing (13%), chemicals (6.5%), machinery and equipment (6%), leather, luggage, shoes (5.3%)

The Education sector
Emmanuel Macron had set the objective, in 2018, of 20,000 Indian students in France in 2025. There will be around 10,000 Indian students by the end the year 2023.

700 French subsidiaries are operating in India, which represented 406,000 jobs for a turnover of 15.5 billion EUR. Most of the major French groups, including 37 of the CAC 40 companies, are now established in India. The French establishments cover the whole of Indian territory, but they are mainly concentrated in a few cities: Bombay 30%, Delhi 27%, Bangalore 15%, Pune 10%, Chennai 5%.

Industrial location constraints and cost-competitiveness considerations, in a highly competitive market, favor the establishment of industrial capacities, as illustrated by Renault’s success with an entry-level model, the Kwid, built with  98 % local components.

Total has announced in 2022, an investment of EUR 300 million alongside Adani in green hydrogen.  Schneider Electric invested in a smart factory for an amount of EUR 50 million, Safran has invested EUR 150 million in two new industrial sites in Hyderabad, ADP has invested in the new Goa airport, the construction cost of which amounts to EUR 340 million. Recently, CMA-CGM invested 130 M EUR in the modernization of a new terminal in Bombay for which it won the concession.

60 Indian companies are operating in France. The key sectors are transport (Motherson Group), agri-food, hydraulic equipment (Electrosteel), pharmaceuticals (Aurobindo), biotechnologies (Sintex) and IT (HCL, TCS, Infosys, Centum).

Cultural differences between France and India

Despite the great mutual business opportunities for France-India Trade, there are cultural differences between France and India that are important to understand.

Individualism and collectivism
While India is more collectivist, France tends more towards Individualism.
In France, it is rather the so-called “nuclear” family, whose households are made up of one or two generations, which predominates, hence the tendency towards individualism. India, on the other hand, is more made up of so-called “complex” families with several generations under the same roof. For this reason, in India, family influence is very strong in professional and private life.

Hierarchy is very important in Indian companies. Where, in France, companies have for twenty years adopted matrix organizations, the project structures in India are still pyramidal and participative management is therefore not common. For example, an Indian leader would not ask others what to do: that would be a sign of incompetence.

In India, the employee-manager relationship is based on an exchange. The person in charge, director or manager undertakes to “take care” of his employees by providing them with a framework, clear directives and a certain security. In return, employees owe respect and loyalty to their superior and they do not question his authority or his instructions.

Interpersonal Relations
While French is very careful to mark the separation between private and professional life, Indians do not hesitate to speak in a professional setting about extra-professional subjects. Indians have a very strong sense for human relations. They like to share their worries and joys with those close to them, even at work. This behaviour can annoy the French who will tend to want to stay focused on work issues. In India, trust in business comes first and foremost through contact. The majority of companies are family-owned, and this configuration should be taken into account when working with Indians.

Flexibility and Time management
The perception of time in India is very different from that widespread in France. Indians usually arrive later for work and stay late at night in order to compensate. It is therefore common that deadlines are not as sacrosanct as in France. It is also very common for Indians to do everything at the last minute.
With Indians being culturally comfortable with uncertainty, decision-making processes can be very long.
It is also not recommended to make business appointments well in advance, in India, since there is a possibility that they will be canceled or postponed. In the business culture in India, it is usual to go directly to the person with whom you wish to exchange, unannounced rather than to make an appointment for a meeting. So, expect to see your colleagues arriving in your office unexpectedly, and that they expect you to have time to receive them.

To succeed in India, you have to be patient. It often takes several years to achieve success. The return on investment generally does not occur before two to three years. Be persistent in order to gradually establish a relationship of trust with your colleagues, customers and suppliers. Once the relationship is established, you can count on Indian partners who like long-lasting business relationships.

In case of disagreement or conflict, do not lose patience, because your Indian interlocutor would not understand it. To facilitate the progress of a project, avoid making reproaches. Instead, try to understand the origin of the delays to try to reduce them. After such a conflict, systematically send an e-mail with a few positive words about the qualities of your interlocutor, this will help to recover a good relationship.

‘No’ is a word not often heard in India. When you are not understood, your Indian contacts will often say “yes” accompanied by a horizontal nod. It might be necessary to repeat and reformulate to make yourself understood. Also take regular updates on the progress of tasks.

While in France, saying “no” or using a break can be good negotiation techniques, it can be very badly perceived in India. Therefore, when working with Indians, have a more diplomatic approach, asking questions to understand the objections of your contact.

Uncertainty Management
The French do not like surprises which can make them anxious. On the contrary, Indians are relaxed in the face of an unforeseen situation.

Indians have great confidence in the achievement of things even if it means multiple adaptations along the way, while the French attach importance to respecting a precise structure, specifications defined upstream and the respect of agreed deadlines.

The French will therefore easily become irritated during collaborations with the Indians because milestones are not given the same importance, and the Indians will have difficulty understanding the objections of the French.  This issue is crucial if you want to avoid the classic pitfalls of this type of collaboration.

In India, expect some dates can be postponed or even some projects cancelled due to religious and astrological issues. The Indians are deeply religious and an understanding around unavailability during major religious holidays is important. The main religions in India are Hinduism (80%), Islam (14%) and Christianity (2%), followed by Sikhism, Buddhism and Jainism.

France and India Business Culture Training

A France and India cultural awareness training for France-India Trade can have a massively positive impact on your business performance if done well. The skill of delivering a good programme is in being able to relate the generic France and India cultural points to the strategic and tactical objectives of the business.

If you are looking to develop your cultural understanding of France and India and improve your effectiveness as a result, please contact us for an initial discussion

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