INDIA-NETHERLANDS  BILATERAL TRADE & INVESTMENT

The total two-way trade between India and Netherlands has been showing a steady increase. It crossed € 1 billion mark for the first time in 1997, the € 2 billion mark in 2005 and the € 3 billion mark in 2007 reaching a total of € 3.86 billion in 2008.  Indian share in overall Dutch trade, however, continues to be very small. In 2008, Indian exports, though increasing their share in total Dutch imports by about 0.2%, accounted for only 0.69 % of total Dutch imports, and Dutch exports to India were just 0.42 % of total Dutch exports.  Total trade between India and the Netherlands has shown a growth of over 112.77 % in the period 2004 - 2008. Exports from India to the Netherlands in these five years have increased 120 % while Dutch exports to India increased by 102.88 %. 

The Balance of Trade has been in India’s favour since 1992, and has stayed positive. In 2008, it stood at € 734.15 million in favour of India. 

During the year 2008, as per provisional figures released by the Dutch Central Bureau for Statistics, the total two way trade between India and the Netherlands increased by 14.54 %.  Indian exports to the Netherlands grew by 28.12 % and Dutch exports to India fell by 0.8 %.

Despite the stagnation and slow growth in the Dutch economy and the gradually appreciating Euro over the past few years, bilateral trade figures continued to show modest growth.

An important factor that contributes to substantial increase in India’s exports to the Netherlands is the sourcing activities of the large Dutch multinationals in India like Phillips, Shell, Unilever etc as well as product allocations for the Netherlands of other large multinationals in India as a result of their investments in India.  With more multinationals making India their manufacturing base, the increasing trend of Indian exports to the Netherlands is expected to continue.

The progression of bilateral trade in the period 1996-2008 is given below:

 India – Netherlands Trade (in million Euros)

Major Indian Exports to the Netherlands

As per the HS system of classification, 20 product groups account for about 83.49 % of India’s exports to the Netherlands during 2008.

The largest group in Indian exports to the Netherlands is that of mineral products which accounts for 27.44 % of total exports. The products under this group are mineral fuels and mineral oils (26.12 %).

Textile fabrics & textile goods account for 15.88 % of Indian exports to the Netherlands. Within this group, apparels & clothing accessories account for about 11.82 % of the total exports followed by made-up textile articles (2.08%) and carpets & floor coverings (0.91%). The improved quality of Indian goods; consolidation in the Dutch industry; the setting up of their own buying houses by large chains in India and the introduction of international labels in the Indian market, leading to sourcing for local and international markets in India by these brands, have contributed to increased overall exports in the textile sector.

The third largest group of products in Indian exports to the Netherlands is that of Machines; electronic goods; sound recorders & reproducers account for 10.95 % of India’s total exports. Under this heading, the product group electrical machinery equipment is the largest group and it accounts for 6.29 % of India’s total exports to the Netherlands. The main products exported under this heading are discs for laser reading (CD/CDR/CDRW/DVDR/DVDRW); static converters; starter motors; lighting and visual signaling equipment; capacitors/resistors; printed circuits; starter motors; electrical elements & batteries; wires/cables; diodes/transistors; filament lamps; circuit breakers; electromagnets etc.

The fourth largest group in the Indian exports to the Netherlands comprises of non-precious metals and products (8.62%) in which iron and steel is the largest product group (6.45%).

The fifth largest group in Indian exports to the Netherlands is that of products of the chemicals and related industries (7.98%) in which the main products are organic chemicals (4.17%); miscellaneous chemical products (1.41 %); pharmaceutical products (0.87%) and tanning/dyeing extracts (0.65%).

The above groups are followed by (a) products of vegetable origin (7.51 %) in which the main product group is edible fruits & nuts (3.38 %) (mainly cashew nuts) followed by cereals (1.90%); coffee, tea & spices (0.54%) and oil seeds & oleaginous fruit (0.96%);  (b) Transport equipment (3.42 %) in which transport vehicles (3.36%); (c) plastics, rubber and products thereof (2.97%) of which were rubber and articles thereof (2.08%) and plastics and articles were the main product (0.89%); (d) skins, leather and products (2.93%) of which leather goods were the main product (2.45%); (e) Products of the food industry; drinks & tobacco (2.89%) comprising mainly of tobacco & manufactures (0.73%) and preparations of vegetables, fruit, nuts or other parts of plants (0.89%); (f) Footwear, headgear, umbrellas etc (2.21%) which comprised mainly of footwear (2.13%).

Growth Products in Indian Exports  

Besides products given above, there are a number of products that are exported from India in substantial amounts to the Netherlands and have a high growth potential. These are: furniture (€ 36.7 mln); marine products (€ 36.3 mln); ores, ash and slag (€ 23.2 mln); sugars & confectionary (€ 22.7 mln); miscellaneous articles of base metal (€ 22.3 mln); articles of stone, plaster, cement (€21.6 mln); vegetable textile fibres (€ 12.7 mln). and Optical, photographic, cinematographic, measuring, medical or surgical instruments (€ 11.9 mln);

Apart from the above products, there is potential for further increase in the following products: textiles & garments, especially in the high-end products; electronics & computer software; light engineering products like bicycles, light commercial vehicles, tractors and parts thereof; sports goods.

Details of imports of leading product groups from India into the Netherlands are given at annexe I.

 Major Indian Imports from the Netherlands

During 2008, six product groups imported by India from the Netherlands accounted for roughly 87.9 % of Dutch exports to India.

These were: (a) Machines; electronic goods; electrical machinery (38.96 %), products under this group included radio and television transmitters; ballasts for tubes, transformers, etc; circuit breakers; (b) Products of the chemical and related industries (18.12%) of which organic chemicals (7.83%); miscellaneous chemical products (3.84%) and pharmaceutical products (2.51%) formed the largest components; (c) Non-precious metals and their products (10.81%) of which Iron & steel (7.17 %) formed the largest component; (d) Optical, photographic, cinematographic, measuring medical or surgical instruments and accessories (9.07 %), including: photocopier machines and parts; x-ray equipments; medical prostheses; navigation instruments and binoculars; (e) Wood pulp, paper, carton & their wastes (5.86%) comprising of wood pulp (2.36%) and paper and paperboard (3.48%) and (f) plastics & articles (5.05%)

Details of major products of Dutch exports to India are given at annexe II.

Dutch Investments in India

The Netherlands ranked 5^th in the list of countries in terms of cumulative FDI inflows into India during the period April, 2000, to December, 2008 with inflows amounting to US $ 3.52 billion (5 % of total inflows).

Top sectors attracting FDI inflows (from January 2000 to October 2008) from Netherlands are Computer software & Hardware (21.20%), Housing & Real Estate (15.82%), Services Sectors (13.96%);  Chemicals (other than fertilizer) (9.80%), & Cement and Gypsum Products (5.53%).

Top sectors attracting FDI approvals (from October 1991 to October 2008) from Netherlands were: Telecommunications (41%); Services Sector (financial & non financial) (15%); Trading Activities (8%); Food Processing Industry (6%) & Chemicals (other then fertilizer) (6%).

Netherlands has been granted 357 technical collaborations (4.45% of the total) since 1991. The highest technical collaborations have been in the Hotel & Tourism Sector (47), followed by Electrical Equipments (including computer software & electronics) (38), Chemicals (other than fertilizer) (31), Industrial Machinery (29) &  Fuels (power & oil refinery) (19).

A large number of Dutch majors - Philips, Royal Dutch/Shell, Unilever, the big three of Dutch banking - ABN AMRO, ING, and Rabobank - KLM, Akzo Nobel, IHC Holland, SHV, Stork, TNT, DHV and others have established roots in India in important sectors of the economy, and have been steadily planning additional investments to expand their operations in India. 

Furthermore, the intense competitive pressure globally felt by many of the Dutch firms will lead to expansion of their operations in India so that they can avail of the benefits of access to such a large and developing market. The enhanced profitability achieved through outsourcing/offshoring of their business processes is now also being recognized by the small and medium companies in the Netherlands. 

Leading Dutch software companies like Cordys have their own establishment in India while nearly all top IT companies from India like TCS, WIPRO, Infosys, HCL, Satyam have a presence in the Netherlands. Satyam has also taken a listing on the Euronext exchange in Amsterdam. There is also a growing presence of major companies in other sectors such as Moser Baer, Safal, Suzlon and ONGC Videsh.

 Bilateral Agreements

India and the Netherlands have the following economic and trade agreements in place:  (1) An Agreement on Avoidance of Double Taxation (July, 1988) and (2) Bilateral Investment Protection Agreement (November, 1995). Apart from these, the Federation of Indian Chambers of Commerce & Industry (FICCI) and the Dutch employers’ association, VNO-NCW, have an agreement to promote bilateral trade and economic relations (February, 1982) which was renewed in November, 2008. The Confederation of Indian Industry (CII) and the VNO-NCW also have a similar agreement (January, 2000). In February 2004, the two countries signed a Memorandum of Understanding on promotion of Investments. An MoU on cooperation between India and the Netherlands in the field of ports, maritime and logistics was signed during the visit of Dutch Minister for Transport, Public Works and Water Management to India in February 2008. An MoU on cooperation in the field of Science & Technology was signed in March, 2008, during the visit of Indian Minister for Science & Technology and Earth Sciences.

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April, 2009

 Annexe I

COMPARISON OF EXPORTS FROM INDIA TO THE NETHERLANDS

DURING THE PERIOD 2006 – 2008

(as per HS Chapters)

All values in 000’s Euros

Annexe II

Comparison of Exports from the Netherlands to  India During the Period 2006-08

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  Values: 000’s Euros

 Source: Central Bureau for Statistics of the Netherlands