The Indian market has a lot to offer to Czech companies

India belongs to the twelve countries to which the Czech Republic has a priority in business relations and investment. In which disciplines can Czech companies suceed in Indian market? And what can the Czech market offer to the Indian companies? We asked Mr. Deep Kapuria a representative of The Confederation of Indian Industry.

How do you assess the recent development of bilateral economic relations between the Czech Republic and India?
India and Czech have historically shared very warm relations, which have been further strengthened by the recent interactions at the highest levels in the two Governments. Mr Lubomir Zaoralek, Minister of Foreign Affairs of the Czech Republic, visited India in December, 2016 along with a large 30-member delegation including 18 businessmen. This visit brought a freshness to our long standing relationship. Business leaders on both sides have since receieved support from the The Joint Commission on Economic Cooperation, which is co-chaired by India’s Minister of State for Commerce & Indusrty and the Czech Minister of Trade and Industry.

It is very encouraging to know that the Czech Government ranks India amongst the 12 priority countries for promotion of mutual commercial, investment and other economic activities. New mechanisms to address trade and economic challenges over the years have had encouraging results and the two-way trade as well as investments are on the upswing. Bilateral trade between our countries stood at USD 1,073.57 million in 2016-17. There is definitely a need to widen and diversify the trade basket. Major imports from Czech companies to India include cars, machinery, energy facilities, turbines, furniture and chemicals while India exports car parts, tractor parts, electrical equipment, pharmaceuticals, chemical products, machinery (drives and shafts), besides iron and steel and apparels.

Czech Republic ranks 64th amongst foreign investors in India. Cumulative FDI inflows from Czech Republic stood at USD 24.45 million between April 2000 to March 2017. Machinery and equipment of Czech origin, design or technology were well-entrenched in India – particularly in our heavy engineering public sector units – in the power, railways, steel, machine tools and heavy engineering sectors in the period before the Velvet Revolution and this trend continues today.

Several new areas of mutual cooperation are now being explored. Apart from the automotive section, the Czech Republic is exploring opportunities in sectors such as civil aviation, defence, nuclear & solar power and mining technology. Indian business community is very happy with the development of this positive trend.

With annual bilateral trade standing at USD 1.2 billion, I believe that our economic engangement is very reassuring. Yet there is huge potential for enhanced economic cooperation and bilateral trade.

India is the partner country for this year's International Engineering Fair in Brno. What do you think Indian companies find interesting about the Czech Republic?
India was the Partner Country for the International Engineering Fair in Brno in 2012 as well, with a strong 113 company participation. Indian industry has had an association with the Czech Republic for decades, starting with Bata setting up operations in India in the 1930s. For both India and the Czech Republic, the automotive sector is the mainstay of manufacturing. Czech Companies such as Tatra and Skoda have been present in India for over a decade now. Indian automotive companies such as Ashok Leyland and Motherson Sumi have been present in the Czech Republic.

The Czech Republic has a strong tradition in technology as well as engineering combined with technical skills in manufacturing of high-tolerance machinery, steel, forging, castings etc. India, on the other hand, is seeing a rising demand for manufactured goods and Czech technology and engineering prowess can help fulfil this demand. While the Czech Republic is known for its prowess in Heavy Engineering, of the total Indian exports of USD 523 million to the country engineering accounted for USD 413 million in 2015~16.

Indian businesses find Czech Republic a viable investment and business destination. At 4.6% GDP growth, Czech is amongst the few European Economies that have registered a positive economic performance. In Czech Republic, industry continues to remain the dominant sector and the largest employer. The country has a favourable environment to promote industry, which is also reflected in it’s World Bank Ranking (27th). Foreign-investor specific incentives, well-developed infrastructure and a qualified labour force, make it an attractive destination for Indian companies. Additionaly, Czech Republic is centrally located, making it the gateway to Eastern and Central Europe. As a member of the EU, it offers access to a market of over 500 million people. Indian companies hope to be able to access this larger market through the Czech Republic.

There is a requirement of a well-structured IT industry as a base for various industries and India’s expertise in the services sector would be useful.

In what areas do you see the most potential for cooperation between Czech and Indian companies?
In the past companies from both sides have sought collaboration for technology upgradation and several collaboration possibilities continue to exist for businesses from both sides.

Czechia has traditionally been known for its strengths in the Heavy Engineering and Defence. We have had formal mechanisms for cooperation in these two areas - India-Czech Joint Defence Committee and the Joint Working Group on Heavy Engineering & Advanced Manufacturing. Both these working groups have been reactivated over the last 3 to 5 years giving a fillip to cooperation in the two very critical sectors for India.

Manufacturing: Manufacturing has traditionally been an important contributor to economic growth and employment in the Czech Republic. The main pillars of the Manufacturing sector in the Czech Republic include heavyengineering, machine engineering and civil engineering, mining, chemistry, food processing and energy. With the Make in India programme being driven in a mission critical mode, India offers several investment opportunities in high-tech manufacturing sectors

Defence Cooperation: The Czech Republic is traditionally known for their technological excellence in defence industry and boast of state-of-the-art products in NBC defence equipment, passive and active electronic intelligence & surveillance systems, radars, trainer aircraft, high-mobility all purpose vehicles, modernization of Soviet-era tanks, field hospitals and logistics. Given that India has recently opend up the Defence Sector, there are vast possibilities for investment and cooperation for Czech Companies. India and Czech Republic signed a Protocol to promote bilateral cooperation in heavy industry, with a focus on industrial cooperation and facilities construction. This Protocol can be leveraged by companies on both sides to enhance our business engagement.

Business Support Services and Technology Centres: In the new millennium, the Czech Republic has seen a marked shift towards business support services. These include customer contact centres, shared services centres, expert solution centres, software development, research and development centres, design centres and high-tech repair centres. India is also globally known for its expertise in these services thus offering vast opportunities for collaboration.

Research & Development: The Czech Republic’s spending on R&D has increased continually over the past ten years. After gaining membership of the European Union, the country has access to a variety of European Funds and programmes that can be used particularly for R&D infrastructure and innovation. India is also a global hub for R&D and innovation. India’s Engineering and high quality scientific research count amongst the best in the world. There is scope for Indian and Czech companies to combine their expertise in several areas of research and innovation.

Other possible areas of collaboration for Czech Companies in India lie in civil aviation, automotive sector, pharmaceuticals, IT & ITeS, food processing, skill development and mining technology. India has set itself a target of Power For All by 2022 and the Czech Republic is very strong in nuclear & solar power, making it a potential sector for collaboration.