Amid the gloom of India’s falling economic stature and rising disappointment among foreign investors, there is the unlikely success story. Even as foreign investment levels have slowed, French industry has been quietly celebrating its rising presence in India.
Globally France is seen as a slow-moving economy and its industry is considered conservative. But none of this has affected its growth in India. French investments in India have grown by more than a $1 billion every year for the last three years.
For those of us who are desperate for news that pitches India at par with China, its time to raise a toast. French investment in India is over $17 billion which is equal to what they have invested in China. This is remarkable since the Chinese economy is four times that of India. So in ratio terms, the French have invested more in India than in China.
This is a significant fact to dwell on. Earlier this year when I spoke to global investors at the World Economic Forum’s annual summit at Davos, they said India was a hedge investment. Global corporations are putting a percentage of their overall FDI in India just to derisk them from China. In simple words, since companies don’t want to put all their eggs in one basket, they toss a few to India. India is a smaller bet for most investors currently.
But for French companies India plays a bigger role than they ever imagined. French companies employ over 250,000 skilled people in India compared to Japan’s 150,000. The largest employer Cap Gemini has more than 40,000 employees in India.
French Ambassador to India Francois Richier delightfully informs everyone that companies from his country proudly use the “Made in India” label for their exports to Asian and Gulf markets where China is the main competition. The products include electrical equipment, pharmaceuticals and even defence components.
While the popular perception of French products is fed by wine and dairy products on retail shelves, the investment is spread across services, manufacturing and agriculture. French companies in sectors like energy, Information Technology, telecom, defence and aeronautical companies are among the biggest in India. These companies including Saint Gobain, ST Microelectronics, Dassault Systems, Alcatel-Lucent, Alstom, Schneider Electric are among the biggest employers and have invested in R&D as well.
Much of the success of the French companies is a result of patience and sheer doggedness. Companies like Renault had a tough entry, broken partnership and low brand recall in a competitive automobile market. But it continues to plough ahead with increasing success.
French companies came to India in bursts. They decided to understand India by entering it and staying. This is unlike many investors who prefer to wait, until they are reasonably assured of success. This is a strategy that may pay off for investors from other countries who get impatient about India.
Some prominent French companies are still finding their feet. Retail giant Carrefour, food major Danone, tyre maker Michelin, hotelier group Accor and pharma leader Sanofi continue to battle India’s incredible business environment. But these companies seem to have learnt from their successful predecessors that patience pays because it helps in getting a deep understanding of the market. Once these companies find their groove and move into a rapid growth pace, they would further establish the silent revolution of French investment in India.
Meanwhile, the consumers are not complaining. The sales of Champagne are rising and various wine producing regions have offices in India to cater to the Indian palate. The Festival of France flourishes in India.
The author tracks India’s political economy and its engagement with the world @pranjalsharma