After having ignored each other for centuries, economic and commercial relations between the two countries have been growing steadily throughout the past 15 years. Ion de la Riva tells Indian investors why this is a good time to take advantage of the opportunities in infrastructure sectors such as renewable energy.
Spain is a modern knowledge-based economy, with services accounting for 66 per cent of economic activity. The country has become a centre of innovation supported by a young, highly-qualified work force and competitive costs. As the 2nd largest country in the European Union (EU), Spain has a strategic geographic position.
IMFâ€™s Economic Outlook states that Spain is the 9th largest economy in the world and 5th in the EU, with a GDP of over $1,400 billion. UNCTAD figures state that Spain is the 9th largest investor in the world and the 6th largest recipient of FDI. During the past semester, Spain has held the Presidency of the EU, the worldâ€™s number one trading power. The priority of the Spanish presidency was to achieve sustainable economic development through innovation and social cohesion. In other words, the thrust is towards helping turn the EU into a competitive knowledge-based region, whilst preserving its valued social achievements.
India-Spain bilateral trade
Spanish exports to India have displayed a stronger dynamic than imports from India, growing at an average yearly rate of 19.8 per cent, as opposed to 13.6 per cent import growth, from 2000 through 2009. Bilateral trade has historically been low and the potential for growth is still considered to be very large in both directions. Machinery, steel, plastics and chemicals account for a high proportion of Spanish exports, while imports from India are somewhat more diversified, with garments, leather goods, machinery, chemicals, cars and fish topping the list.
There are more than 140 companies based, or with formal tie-ups, in India, covering a broad spectrum of sectors, from automobile parts to sanitaryware, and from irrigation technology to fashion retailing, with a growing number of engineering and infrastructure companies having been awarded their first projects and are bidding for new ones.
Indian investments in Spain have also been growing at a rapid pace, surging from a very low base in 2006 and going on to increase more than four fold during the next three years. Important Indian firms in areas such as steel, IT, car-making, pharmaceutical and renewable energies have set up a presence in Spain, in order to reach out not only to Europe, but also to use Spain as a bridge to Latin America.
From a legal point of view, the main economic agreements between the two countries are the Agreement on Avoidance of Double Taxation, signed in February 1993, and the Bilateral Investment Protection Agreement in 1997. However, in the past two years both governments have found the need to cooperate in different fields, including technology, renewable energies, tourism and agriculture, through the signature of the corresponding sector agreements.
In the last few years, promotional activities and bilateral contacts at the institutional level between India and Spain have intensified. The visit of the Indian President to Madrid in 2009 showed an increased Indian interest in Spain, with the signing of three agreements in the fields of tourism, agriculture and renewable energies in April 2009. In June 2010 Madrid hosted this yearâ€™s edition of the Global India Business Meetingâ€”a high level forum to exchange views on economic relations between India and the rest of the world. Spain also witnessed two high level official visits by Indian ministers last year: Farooq Abdullah, Minister of Renewable Energies, in May, and Anand Sharma, Minister of Commerce and Industry, in June, heading the Indian delegation for the Indo-Spanish Joint Commission.
Late last year in Delhi, I launched the India-Spain Foundation, whose Chairman Antonio EscÃ¡mez is also a Member of the Executive Committee of Banco de Santander, one of the worldâ€™s leading banks. He was accompanied by an outstanding business delegation. The Spanish Minister for Science and Technology Cristina Garmendia, and the Minister of State for Energy Pedro MarÃn, also visited India last October.
Spainâ€™s standing, specifically as a relevant actor in the economic and technological fields, has doubtlessly been increasing in the last few years. A contributor is the worldwide recognition Spain has acquired in sectors that have caught Indiaâ€™s imagination, like solar energy or high speed trains. But Spain has a lot more to offer in several diverse sectors.
The author is the Spanish Ambassador to India.