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India can become a key market for Italian machinery makers

by Gianluca Di Donfrancesco

“Our exports to the Indian market are still quite low, but we have the technology to conquer the opportunities that will open up in this market over the next ten years,” said Carlo Banfi, Vice President in charge of Internationalization at Anima, the federation of assorted mechanical companies.

The association’s research center presented a snapshot of the Indian market to its members during the “Indian Opportunities for Italian Companies” convention held recently in Milan (in collaboration with the Indian embassy in Rome).

There has been a sharp drop in the sector’s exports to India over the last few years, sinking from €478 million in 2011 to €247 million in 2014. Following the recovery in 2015 (€314 million), there was yet another drop last year, down to €277 million (-12%).

“We can compare modern-day India to China twenty years ago: complex, multi-faceted, and distant,” explains Banfi.

China itself can provide an immediate gauge of potential: the assorted mechanical companies’ exports to China are worth nearly €900 million—a figure that is constantly growing. Even though China is more technologically-advanced than India (and therefore their demand is much better suited for the quality of Italian production), the two countries have similarly-sized populations and the Indian government is encouraging modernization throughout the country with their “Make in India” project (which launched in September 2014).

Since then, India has received $130 billion (as of September 30th, 2016) in direct foreign investments—according to figures provided by Suja Chandy, Vice President of Invest India (the national agency in charge of promoting investments in India).

“The excellence of our mechanical products is already greatly esteemed,” claims Banfi, “but our products will be preferred to a greater extent within the next 5-10 years. India is a new frontier for Anima’s machinery, and it must be handled correctly.”

For the time being, this means that they need to keep in step with the large global players.
As such, normalizing bilateral relations between the two countries will be a big help.

“2016-17 saw renewed economic interest between India and Italy,” states Anil Wadhwa, India’s ambassador to Rome, “Our countries have a natural connection, through the small and medium-sized businesses. Our trading operations are diversifying, and our interests are expanding in many sectors—currently, Italy and India are actively cooperating in at least 49 sectors. More than 500 Italian companies operate in India, and around 60 Indian companies have offices in Italy. Investments have grown substantially in both directions.”

For its part, Italian Trade Agency ITA will double its investments in activities that support Italian economic activities in the subcontinent: up to €3.5 million in 2017. Their efforts will be concentrated in three key sectors: mechanics, industrial design, and logistics.

“The normalization of bilateral relations,” explains ITA President Michele Scannavini, “has made India an economic priority for Italy, since we are under represented in this market and we can do much more.”

This renewed, reciprocal interest between India and Italy will get a boost during the two countries' mutual visits, starting with the mission to New Delhi and Mumbai April 26th-28th. Led by Ministry of Economic Development Undersecretary of Commerce Ivan Scalfarotto, more than 100 companies will come along.

This visit, together with “the Indian Minister of Commerce and Industry’s visit to Italy, from May 11th-12th, will be two key moments,” comments Wadhwa.