Embassy of Switzerland in India

512.0 BRUBR/ WEU/ SRU

Swiss representation in: New Delhi Formular: A754

country: India Last update: 10. February 2017

INDIA: Economic Report 2016-17 External version

0 Executive summary

India, with 1.3 billion people, is globally the fastest-growing G-20 economy. In the
fiscal year 2016/17, its economic growth rate reached 7.1 percent, which is high
compared to the global economy, which grew by around 3.0 percent. India is the worlds
fourth-largest economy, has globally the largest and youngest working-age
population 1, and is expected to achieve a high growth rate of 7.3 percent in 2017/18
and of 7.7 percent in 2018/19.

India is a land of millions of entrepreneurs and has a deep tradition of a business

oriented mind-set. The Modi Government has prioritized the encouragement of start-ups
and entrepreneurs as a key plank of economic policy through creating a vibrant entre-
preneurial ecosystem in India, which identified the important role smaller and newer
companies play in economic growth and job creation. 2

Keeping in view the reforms undertaken by the Indian government in the recent past,
India has been ranked 39 among the 138 countries in the Global Competitiveness
Index (GCI) 2016-17 3 released by the World Economic Forum (WEF), jumping 32
positions in two years from its rank of 71 in 2014.

India approved its major tax reform related to the Goods and Services Tax (GST)
in 2017, after a decade of preparation. Its rollout took place on 1st of July, 2017.

Indias foreign trade increased in the fiscal year (FY) 2016-17. The countrys exports
amounted to over USD 276 billion (+5.3%), while its imports decreased slightly to USD
384 billion (-0.9%). Consequently, the trade deficit came down. Bilateral Trade Flows
between Switzerland and India amounted in FY 2016-17 to USD 18.3 billion. 4

Cumulative FDI data indicates that India received foreign direct investments worth
USD 484 billion from April 2000 till March 2017. Switzerland is the 11th major investor
based on Indian statistics (USD 3.8 billion inflows). As a large part of FDIs in India are
rooted through other countries, including from Switzerland, the actual Swiss direct
investment in India is estimated to be even higher (Swiss National Bank reports CHF

1
Around half of Indias population is under 25 years old.
2
Alain Roslin: Boom Country? The New Wave of Indian Enterprise, 2017, page 28f.
3
https://www.weforum.org/reports/the-global-competitiveness-report-2016-2017-1
4 st st
Fiscal year runs from 1 April to 31 March (Indian statistics);
Swiss custom statistics show for the year 2016 a trade flow of CHF 15.8 billion.
 8.8 billion). Switzerland is also the 7th largest recipient of Indian investments (USD
1.58 billion received over the last three years).5

Over the last years, the number of Swiss companies active in India has further
increased with currently around 250 subsidiaries, joint ventures, branches or
liaison offices being present. About 140 Indian companies have a presence in
Switzerland.

There are negotiations ongoing between EFTA member states (including Switzerland)
and India on a Free Trade Agreement, named Trade and Economic Partnership
Agreement (TEPA). With regard to the Bilateral Investment Protection Agreement
(BIT), in April 2016 India informed Switzerland as well as around 60 other countries
about its decision to terminate the existing BITs. Renegotiations between Switzerland
and India started in April 2017.

On 22 November 2016, Switzerland and India newly signed a joint declaration on the
introduction of the automatic exchange of information (AEOI) in tax matters on a
reciprocal basis.

The Swiss network of representations in India (Embassy, Consulates General

including Swiss Business Hub India, swissnex, Switzerland Tourism, and Honorary
Consuls) continues to fully engage in Swiss economic promotion in India.

The Embassy has taken a new biennial initiative for 2017 and 2018: 70 Years of Swiss-
Indian Friendship: Connecting Minds Inspiring the Future, to take Switzerlands
image further and to present cutting edge innovations where Switzerland and Indian can
mutually benefit. The new initiative is in commemoration of the 70th anniversary of the
bilateral friendship treaty signed in 1948. This initiative will provide an excellent
opportunity to organize numerous missions and events to further strengthen the bilateral
economic relations between the two countries.

The Official visit of the President of the Swiss Confederation, Mrs. Doris Leuthard,
to India, from 31st August to 1st September 2017, will be the highlight of this year.

5
Ministry of Finance, Department of Economic Affairs, Overseas Direct Investment, http://dea.gov.in/overseas-
direct-investment (status by June 30, 2017).

2
1 Economic issues and problems

The year 2016 marked the 25th anniversary of the commencement of major economic
reforms in India, which started in 1991. Over the years successive governments have
gradually moved forward along Indias development path to further transform and liberalize
the Indian economy.

Prime Minister Narendra Modi and his Government, representing the National Democratic
Alliance (NDA) led by the center-right Bharatiya Janata Party (BJP), is seen as Indias
strong and charismatic leader with a solid political majority. His recent win (2017) in State
elections underlines his and the Governments mandate to accelerate Indias socio-
economic development as well as the implementation of its policy and reform agenda.6 Mr.
Ram Nath Kovind 7 has been recently elected as 14th President of India for a five-year
term starting July 25, 2017.

India, with 1.3 billion people, is globally the fastest-growing G-20 economy. In the
fiscal year 2016/17, its economic growth rate reached 7.1 percent, which is high compared
to the global economy, which grew by around 3.0 percent. India is the worlds fourth-
largest economy, has the worlds largest and youngest working-age population8, and is
expected to achieve a high growth rate of 7.3 percent in 2017/189 (see also IMFs new
outlook data, July 2017) 10 . This growth is being enabled by increased production of
goods and services for both the domestic and the export markets, by rising consumer
spending, by large-scale Government infrastructure programs11, and last but not least, by
an uptick in the rural economy, also due to a good monsoon. Nevertheless, Indias high
growth rates benefited also from low oil prices12, as well as a mix of good fortune.

India is on the way to become a country booming with economic activity. It is a land
of millions of entrepreneurs and a country with a deep tradition of business. 13 The Modi
Government has prioritized the encouragement of start-ups and entrepreneurs as a
key plank of economic policy through creating a vibrant entrepreneurial ecosystem in India,
which identified the important role smaller and newer companies play in economic growth
and job creation.14
Various reforms are ongoing or expected to ease domestic supply bottlenecks and to
increase productivity. India shows good potential to become the next export power
house in South Asia 15 , by improving and further expanding its exports of goods and
services. However, over the coming years, no country will have to generate as many
jobs as India, putting a huge pressure on policy makers, to ensure that the sufficient and

6
EIU, country report India, dated 31.5.2017, Policy Trends, page 5.
7
The new Indian President, Mr. Kovind, is 71-years old and a lawyer by profession. He has served as the
central governments Counsel at the Supreme Court. He has been a Member of Parliament for two terms
(1994 till 2006) and been the national spokesperson of the Bharatiya Janata Party (BJP) and the President of
BJPs Scheduled Caste (SC)/ Scheduled Tribes (ST) front (1998 till 2002). He has worked extensively for
education in rural areas and in providing free legal aid to weaker sections of the society, especially the SC/ST
women, the poor and disadvantaged girls. In addition to having an unblemished image, Mr. Kovind comes
from the Dalit community (a collective term used for those marginalized, oppressed and often treated as
untouchables on the basis of caste).
8
Around half of Indias population is under 25 years old.
9
Ministry of Commerce & Industry: Annual Report 2016-2017, page 20 indicates for FY 2018 an expected
growth rate of 7.6 percent.
10
IMF: Economic Outlook July 2017; https://www.imf.org/en/Publications/WEO/Issues/2017/07/07/world-
economic-outlook-update-july-2017: For India: growth rate in 2016 is 7.1 percent, while projections for 2017
are 7.2 percent, for 2018 are 7.7 percent.
11
e.g. in roads, railways, airports, harbors, urban development, housing, schools, education and innovation etc.
12
India remains a huge importer of oil and prices have tumbled from well over $100 a barrel in May 2014 to less
than half that now. Analysts estimate that this alone has boosted GDP by 1-2%.
13
Alain Rosling: Boom Country? The New Wave of Indian Enterprise, page 28f. Hachette India, 2017.
14
Government of India, Planning Commission, 2012. Report of the Committee on Angel Investment and Early
Stage Venture Capital
15
World Bank published an interesting study named, South Asias Turn policies to boost competitiveness and
create the next export powerhouse

3
adequate employment opportunities are created16. 10 percent economic growth (or higher)
over the next 4-5 decades is needed to create enough jobs to absorb around one million
Indians who enter the labour market every month17. This is a huge challenge which
Government officials and other experts dwelled upon at many events and conferences last
year.
On November 8, 2016, both the Indian Government and the Reserve Bank of India
announced a new currency reform, named demonetization, combined with tight
implementation measures introduced over-night. The main purpose of the demonetization
was to intensify the fight against black-money, corruption, terrorism financing, to accelerate
the transformation of the informal economy to a formal one, and to generate higher tax
revenues by expanding and deepening the tax payers base. This drastic measure, its
implementation and the expected impact on Indias economy as well as on peoples daily
lives has dominated the countrys media and politics for months. What about its expected
and real impact? Contrary to widely expressed fears of a major dip in the growth rate
following demonetization, the Indian economy has remained quite robust.
While the short-term impact was negative on the GDP (consumption and investment
demand to suffer due to cash crunch), it was mainly neutral on the fiscal deficit/ tax
collection, and positive on digital payments (higher incentives to use digital payment
platforms) as well as on inflation (due to lower demand). A benefit of the demonetization in
the medium run may also ease liquidity for the banking system18. The long-term impact
(12 months and beyond) is expected to be positive, mainly due to rise in consumption,
better tax compliance and collection of nearly 25% of unaccounted funds, the increased
number of people using digital payment systems 19, and last but not least, the increased
transparency and intensified fight against corruption and black-money.
The Reserve Bank of India (RBI) eased its monetary policy during the year 201520. Later,
it was tightened as inflation expectations have still not fully adjusted down. However, the
Reserve Bank of India deserves some credit for bringing back macroeconomic stability.
On the fiscal side, India approved its major tax reform related to the Goods and
Services Tax (GST) in 2017, after a decade of preparation. It brings a single indirect tax
system in the whole country. The new tax system is unifying the country economically,
supporting and accelerating economic growth and improving framework conditions for doing
business in India. It should result in a more predictable and transparent tax system and
further reduce compliance costs for the companies. Its rollout took place on 1st of July,
2017 and represents an important milestone. However, there remain a remarkable
number of open issues and implementation challenges, partially because of business
guiding papers which are not yet timely available, partially because of the complexity of the
reform. Its impact on the informal economy is also questionable. While the switch will be
easier for companies in the formal sector, it will be difficult for the huge number of small,
unorganized firms which are not yet GST-ready.
For India, there is a need to reduce the relatively high Public Debt to GDP Ratio, which
leaves the Government little room for economic stimulus. However, investing more in
physical and social infrastructure (e.g. health, education) remains critical for raising
the living standard of all citizens (OECD on India in June 2017 21).
There are also some signals 22 that India might make the historic transition to end the 150-
year-old tradition by changing its financial/ fiscal year from 1st April - 31st March to 1st
January 31st December, in 2018. If planned, the next Budget could be presented by the
Central Government as early as in November 2017.

16
EIU country Report on India, June 2017, page 31.
17 th
The Economist (June 24 -30, 2017) edition: Modis India: The illusion of reform, p.19
18
Ministry of Commerce & Industry: Annual Report 2016-2017, page 20.
19
Assocham: Currency Demonetization: Short Term Pain, Long Term Gain (January 2017).
http://www.assocham.org/publications.php
20
Ministry of Finance, Annual Report 2015-16, Introduction chapter, page x.
21
OECD: Economic Outlook, June 7, 2017 (fact sheet on India).
22
http://economictimes.indiatimes.com/news/economy/policy/financial-year-likely-to-be-changed-from-2018-
budget-in-november/articleshow/59323946.cms

4
With regard to positive developments and digital aspects, the Modi Government has
championed a nationwide biometric scheme known as Aadhaar, which has made many
Indians visible for the first time. Linking digital identities to mobile phones and bank
accounts has made it possible to get Government schemes and subsidies closer to those
who need them. The gains made from Aadhaar could end up being quite sizeable.23
On the contrary, remarkable risks for the Indian economy are related to the Indian
Banking sector. Indias large state-owned banks will need up to CHF 14 billion 24 equity
capital, highlighting a key challenge facing the banking sector, 70 percent of which is
accounted for by public sector banks. Banks will have to increase their equity to meet the
capital adequacy norms and to clean up their balance sheets. On May 5, 2017, the
Reserve Bank of India (RBS) received more power to deal with the non-performing
assets in the banking sector, based on the approved amendment of the Banking
Regulation Act 1949. The stressed loans resolution package prepared by the government
will empower the central bank to directly intervene in settling bad loan cases. 25
Other areas where the progress of reforms is limited are, e.g. (a) the much discussed
privatization of state-owned firms; (b) the labour market reforms where plans are afoot to
consolidate over 40 central laws into four codes; (c) the pending land reform, where some
responsibilities have been handed over to States; or (d) pending judicial reforms (24m
pending cases) 26
Besides those mainly illustrated risks and challenges in the Indian economy, it is important
to remind the reader about the overarching transforming India policy agenda.
Indias National Institute for Transforming India (NITI Aayog), the governments premier
think tank, published on 23 April 2017 a new draft of the Three Year Action Plan (2017/18
to 2019/20). A second document containing the Fifteen Year Vision and Seven Year
Strategy is currently under its preparation. Prime Minister Modis development philosophy
implies that development should include every citizen (Sabka Saath, Sabka Vikas) 27 .
Focused on transforming India, the new Action Plan aims to better align Indias
development strategy with the changed reality. Addressed are themes such as: (a) the
medium-term revenue and expenditure framework (related to the Governments budget), (b)
the economic transformation in the major sectors (agriculture, production and services), (c)
the regional development (from rural to urban), (d) growth enablers (e.g. private sector
involvement, infrastructure, digital connectivity, energy sector, science and technology, or
the creation of effective innovation ecosystem), (e) Government (including taxation policy,
administration, regulatory framework) and Justice System, (f) social sector (reforming the
education system, promoting skill development, transforming the health service system).28
This document provides an important policy framework to better understand, which
development and reform path India is currently following. Their implementation has been
accelerated in the year 2016/17 by the Modi Government.

23 th th
The Economist: Modis India. The illusion of reform. June 24 30 2017, page 19.
24
Or Rs 95000 crore (1 core= 10m Rupees)
25
Newspaper Mint, June 9, 2017: http://www.livemint.com/Home-Page/gblCa7SKnItZlMiWcJDs3K/President-Pranab-
Mukherjee-approves-ordinance-to-amend-Banki.html
26 th th
The Economist: Modis India. The illusion of reform. June 24 30 2017, page 19.
http://www.economist.com/news/leaders/21723830-he-more-nationalist-firebrand-indias-prime-minister-not-much-reformer
27
NITI (Aayog) Former Ministry of Planning : Three Year Action Agenda http://niti.gov.in/, page 5
28
NITI (Aayog) Former Ministry of Planning : Three Year Action Agenda http://niti.gov.in/, pages 1-6 ff.

5
2 International and regional economic agreements

2.1 Indias policy and priorities

2.1.1. Tax Policy

OECD Automatic Exchange of Information (AEOI) in tax matters

and joint declaration signed between Switzerland-India

India has expressed a strong interest towards intensifying its fight against black-money and
corruption, coupled with its aim to substantially increase the collection of taxes.

On 22 November 2016, Switzerland and India signed a joint declaration on the introduction
of the automatic exchange of information (AEOI) in tax matters on a reciprocal basis. It is
based on the Multilateral Competent Authority Agreement on the Automatic Exchange of
Financial Account Information (MCAA), which is based on the international standard for the
exchange of information developed by the OECD. Both countries intend to start
collecting data in accordance with the global AEOI standard in 2018 and to exchange it
from 2019 onwards.

The signing of the joint declaration with India confirms Switzerland's international
commitment to implementing the AEOI standard. Switzerland is thus strengthening its
network of AEOI partner states. India meets in particular the high demands in terms of
adherence to the principle of speciality and the safeguarding of confidentiality for the data
delivered, which are prerequisites for the introduction of the AEOI.

The Federal Council has authorized the Federal Department of Finance (FDF) to conduct a
consultation for the introduction of the AEOI with India and other countries. Thereafter, the
corresponding federal decrees will be submitted to the Swiss Parliament for approval. 29

2.1.2. Trade Policy

India and the World Trade Organization (WTO)

Since its accession to GATT (on 8 July 1948)/ WTO in 1995, India plays its role in the
category of developing and emerging countries. At the risk of being categorized a reluctant
globaliser, India embarked on the path of slow and steady liberalization of the economy. It
still maintains high tariffs in many products (including agricultural products) and has given
limited access to foreign investors in many sectors. 30

In 2016, India has taken the initiative to launch discussions on a Trade Facilitation in
Services (TFS) Agreement at the WTO, as a services counterpart of the goods-specific
Trade Facilitation Agreement (TFA). India opines that a TFS Agreement will address the
key issues that are pertinent to facilitating trade in services. However, it might be
challenging to further progress this issue within the WTO while blocking other discussions
on raising matters, e.g. in February and May 2017 related to investment and dispute
settlement issues.31

India and Free Trade Agreements

With the ongoing WTO negotiations facing for a longer time a certain deadlock, the focus
of trade negotiations has also moved more towards Free Trade Agreements (FTAs). In
the early 1990s, India had few FTAs or Preferential Trade Agreements. Over time, these

29
Current status: check e.g. on the SIF- website: https://www.efd.admin.ch/efd/en/home/themen/wirtschaft--
waehrung--finanzplatz/finanzmarktpolitik/automatic-exchange-of-information--aeoi-.html;
The legal foundations for introducing the AEOI entered into force on 1 January 2017.
30
UNCTAD and Centre of WTO Studies, Indian Institute of Foreign Trade, New Delhi: Twenty Years of Indias
Liberalization. Experiences and Lessons (UN, 2012), overview chapter, page 1.
http://wtocentre.iift.ac.in/books/Prof.%20Abhijit%20Das%20and%20Rashmi%20Banga.pdf
31
mint (newspaper in India), 11 May 2017: http://www.livemint.com/Politics/z7ZcaQc8rzCTcpt2qYdfaM/India-
blocks-discussion-on-global-investment-facilitation-at.html;

6
have increased and the proliferation of FTAs has been supplemented by larger agreements
in the form of Comprehensive Economic Partnership Agreement (CEPA) or Comprehensive
Economic Cooperation Agreement (CECA) which cover many more areas than
conventional market opening under FTAs. 32

The situation for India (2014) was summarized in a government note on FTAs as follows:
India has preferential access, economic cooperation and Free Trade Agreements
(FTA) with about 54 individual countries.33 India has signed bilateral trade deals in the
form of Comprehensive Economic Partnership Agreement (CEPA)/ Comprehensive
Economic Cooperation Agreement (CECA)/FTA/Preferential Trade Agreements (PTAs) with
some 18 groups/countries. India is a late, and cautious, starter in concluding comprehen-
sive preferential tariff agreements covering substantially all trade with some of its trading
partners. 34

India is currently negotiating FTAs (including follow-up agreements) with the EU,
EFTA 35 , Sri Lanka, Israel 36 , Thailand, Mauritius, New Zealand 37 , Singapore, Southern
African Customs Union (SACU), MERCOSUR, Chile, BIMSTEC (Bangladesh, India,
Myanmar, Sri Lanka, Thailand, Bhutan and Nepal), Gulf Cooperation38 Council, Canada39,
Indonesia, Australia40 and the Eurasian Economic Union41 (Russia, Belarus, Kazakhstan,
Armenia and Kyrgyzstan).

EU is Indias largest trading partner. Sixteen rounds of negotiations have been held so far,
the last in March 2013 in Brussel. Three stock-taking meetings have taken place in Delhi or
Brussel with regard to the India-EU Broad based Trade and Investment Agreement (BTIA).
After the termination of all Bilateral Investment Agreements (BITs) by India in 2016, the EU-
India BTIA negotiations were also blocked. At political and technical level, the EU
commission tries to find common ground to re-open the negotiations.

EFTA: The 16th round of negotiations India-EFTA on a Trade and Economic Partnership
Agreement took place in early June 2017 in Liechtenstein. Issues in core fields, such as
trade in goods, trade in services and Intellectual Property Rights were discussed. A next
round is scheduled to take place in mid-September 2017 in New Delhi.
USA: With regard to the US and after the election of its new President in 2017, the
relationship became more complex, also with regard to the Trans-Pacific-Partnership
(TPP)-Agreement. The US decided not to sign it. Given the US accounts for 68 percent
of the groups total GDP, ratification will not be possible without its signature42. There are
Indian trade experts (think tanks) who say India should take advantage of the delays in the
TPP and TTIP to set its domestic house in order and to register as a major trading nation. 43
Generally, several well established, bilateral dialogue mechanisms do exist on trade and
investment related issues, including a Ministerial level Economic and Financial Partnership,
a Ministerial Trade Policy Forum and the India-US CEO's Forum. The other bilateral
institutional setups include the India-US Investment Initiative and the US-India Infrastructure
Collaboration Platform. Prime Minister Modi visited President Trump in June 2017 in the US
to establish good contacts.

32
Department of Commerce, Government of India, Free Trade Agreements. Frequently Asked Questions,
Note/ page 4, dated April 9, 2014.
33
Brookings India: Working Paper (by Harsha Vardhana Singh): Trade Policy Reform in India since 1991,
page 27.
34
Department of Commerce, Government of India, Free Trade Agreements. Frequently Asked Questions,
Note/ page 4, dated April 9, 2014.
35 th
EFTA-India TEPA: 16 round took place early June 2016 in Malbun (Liechtenstein). Ongoing negotiations.
36
8 rounds (2013) have been held / Source: Ministry of Commerce & Industry: Annual Report 2016-17; page 92.
37
10 rounds (2015) have been held / Source: Ministry of Commerce & Industry: Annual Report 2016-17; page 75.
38
2 rounds (2006/08) have been held / Source: Ministry of Commerce & Industry: Annual Report 2016-17; page 92.
39
9 rounds (2015) have been held / Source: Ministry of Commerce & Industry: Annual Report 2016-17; page 75.
40
9 rounds have been held so far. / Source: Ministry of Commerce & Industry: Annual Report 2016-17; page 75.
41
In 2016, it was agreed to initiate the FTA negotiations. / Source: Ministry of Commerce & Industry: Annual
Report 2016-17; page 85.
42
Carnegie India: Indias Trade Policy dilemma and the role of domestic reform (Febr. 2017), page 8.
43
Carnegie India: Indias Trade Policy dilemma and the role of domestic reform (Febr. 2017), page 16.

7
UK- The Brexit: The Indian Government expects the impact of the exit on India to be
minimal. India it seems is well prepared to deal with this situation, considering its sound
macroeconomic fundamentals, comfortable foreign exchange reserves, commitment to
fiscal discipline and declining inflation. Nevertheless, factors such as the impact on the
preferential access to EU markets; the need for recalibration of the broad-based Bilateral
Trade and Investment Agreement (BTIA) and change in import-export tariff barriers, would
become clear once the process of separation of UK from EU is completed, subject to the
final terms and conditions of UKs withdrawal arrangement with the European Union. 44

Regional Comprehensive Economic Partnership (RCEP)

On regional basis, India is a member of two regional Free Trade Agreements (FTAs) in Asia:
i) Agreement on South Asian Free Trade Area (SAFTA), ii) India-ASEAN Comprehensive
Economic Cooperation Agreement on goods, services and investment. Launched in
Cambodia on December 20, 2012, the RCEP is an FTA between 10 members of ASEAN
and its FTA Partners (including India). 45 The sixteen participating countries account for
almost half the worlds population, 30 percent of global GDP, and 25 percent of world
exports.46 India is participating in the RCEP negotiations but appears to be doing so with
extreme caution. There are experts who think that India should be more forthright.

Indias Foreign Trade Policy 2015-2020

The Government of India launched its Foreign Trade Policy 2015-2020 on April 1, 2015.
Measures were adopted on trade facilitation by inducing and providing a framework for
increasing exports of goods and services, generating employment and increasing value
addition, following the Make of India vision, as well as better linking with other features,
rules, procedures, initiatives and incentives, such as Digital India, Skills India a.o. In that
context, the Ministry of Commerce & Industry set up also an outreach program to the
exporters located in 34 major export clusters/cities. The program focuses on training of
exporters to utilize the FTAs, tracking inputs from exporters on FTAs etc. Further, with
support of the same Ministry, the Indian PHD Chamber launched a new Trade and
Investment Facilitation Services (TIFS): Single Window Information and Facilitation
Services towards the end of March 2017 for negotiations and promoting awareness about
the contents of the website www.indiantradeportal.in. 47

2.2 Outlook for Switzerland (potential for discrimination)

The Swiss authorities are following several avenues to minimize discrimination risks of
Swiss companies doing business in India and to ensure a level playing field. Its priorities
and focus are related to trade facilitation, to investment protection and intellectual property
rights. This includes inherent topics such as Indian custom import taxes (goods and
services), trade regulations, market access questions for companies doing business in
India, Intellectual Property Rights and Swiss trade marks (enforcement), the implementation
of the new GST tax regulations by India, the upcoming new regulation in Switzerland on the
automatic exchange of information in tax matters (on reciprocal basis) between Switzerland
and India (AEOI), as well as technical or phytosanitary regulations; others are related to the
bilateral Air Services Agreement. India started recently to further open-up this sector.48

The Make in India campaign of the Government has also an inherent risk for an unequal
treatment of Indian and foreign companies, to a smaller or bigger extent. However, this has
to be observed on a case by case basis.

44
Indian Ministry of Commerce & Industry: Annual Report 2016-2017, page 22.
45
World Trade Organization, WTO members debate new proposals to ease global flow of services,
https://www.wto.org/english/news_e/news16_e/serv_05oct16_e.htm
46
Regional Comprehensive Economic Partnership, Department of Foreign Affairs and Trade, Australian
Government, http://dfat.gov.au/trade/agreements/rcep/Pages/ regional-comprehensive-economic-
partnership.aspx
47
Ministry of Commerce & Industry: Annual Report 2016-17; page 46.
48
Ministry of Finance informed in spring 2017 about Air India and the new opportunity that foreign investors
are allowed to bring in capital.

8
Generally, Switzerland is following the critical issues closely (incl. individual company
problems) and includes its concerns directly into the established bilateral dialogues with the
Indian Government (e.g. the India-Swiss Joint Economic Commission), into ongoing
negotiations (e.g. EFTA-FTA, or bilateral on BIT), or as a member of WTO, OECD and
other organizations in the existing policy and technical committees.

3 Foreign trade
3.1 Development and general outlook
3.1.1 Trade in goods
Indias foreign trade increased in the fiscal year (FY) 2016-17. The countrys exports
amounted to over USD 276 billion (+5.3%) as compared to USD 262 billion in the previous
fiscal year. Its imports on the other hand decreased slightly this year to USD 384 billion (-
0.9%) from close to USD 388 billion in the FY 2015-16. Consequently, the trade deficit
came down.
According to the data released by the Indian Ministry of Commerce and Industry (see annex
3), the demand for Indian goods from its major trading partners increased in the FY 2016-
17, with the notable exception of the U.K. (-3.0%). This increase is due in particular to
higher exports to regional economic powers such as Hong Kong (17.1%), China (+13.2%)
and Singapore (+24%). One may also underline the increase of exports of 5.8% to the
European Union. On the side of Indias imports, countries such as the U.A.E (+10.6%) and
Iraq (+8%) registered significant growth whilst the biggest losses were recorded by
Switzerland (-10.6%) 49 and the E.U. (-3.5%).
When it comes to Indias foreign trade basket, the top five import commodities are currently
petroleum crude and products (18.1% + 4.3% = 22.4%) 50, gems and jewellery (12.8%),
electronic items (10.9%), chemicals and related products (9.8%) and machinery (8.9%).
Compared to the previous year, a rather sharp decline in imports can be observed for gems
and jewellery (-21.2%) as well as for chemicals and related products (-14.5%). On the
export front, the top five commodities are gems and jewellery (17%), textiles and allied
products (12.6%), chemicals and related products (12.1%), petroleum products (11.3%)
and agricultural and allied products (8.6%) with a notable increase of 14% in the import of
gems and jewellery.
India maintains a relatively high import duties setup in order to protect its domestic market,
and there are some non-tariff barriers for pharmaceutical and food products (labelling
issues), bureaucratic procedures, infrastructural bottlenecks and resultant high transaction
costs. Nevertheless, the recently rolled out uniform indirect tax (Goods and Services Tax) is
expected to reduce the transaction costs for both domestic and foreign companies,
especially those in the industry sector.

3.1.2 Trade in services

According to the Reserve Bank of Indias monthly data on Indias international trade in
services, the countrys service exports increased by about 4.4 percent from USD 154 billion
to USD 160.7 billion in the FY 2016-17, while its service imports grew by over 22 percent
from USD 84 billion to USD 102.7 billion.51 The surplus on Indias services trade side now
covers about 54 percent of the deficit in its merchandise trade (60 percent in the FY 2015-
16). In 2015, the share of Indias services exports as percentage of the global services
exports at 3.2 percent was nearly double that of its share (1.6 percent) in global merchan-

49
In chapter 3.2.1. on bilateral trade and the decrease, reasons are mainly related to the strong decline in
exports of gold and jewelry. However, also the machinery and other core sectors of Switzerlands export
industry were impacted.
50
The figures in brackets are the approximate share of the top five commodities in Indias total imports/exports
during 2016-17 (April-October). Source: Ministry of Commerce and Industry, Annual Report 2016-17,
http://commerce.gov.in/writereaddata/uploadedfile/MOC_636281140249481285_annual_report_16_17_eng.pdf
51
Reserve Bank of India, Indias International Trade in Services,
https://m.rbi.org.in/Scripts/Pr_DataRelease.aspx?SectionID=352&DateFilter=Year
N.B. During the fiscal year 2016, Indias service exports had declined y-o-y by 1.8 percent to USD 154 billion,
while its service imports grew by 4.3 percent to USD 84 billion.

9
dise exports.52 The major sectors contributing to Indias service exports are (in descending
order of percentage share): IT-related, business, travel, transport, and financial/insurance,
whereas the major sectors constituting Indias service imports are: business, transport,
travel, financial services and IT.
Continuing its steady growth over the past few years, the tourism sector continued to
perform very well in calendar year 2016 as well. India received 8.9 million foreign tourists
as compared to 8 million during the previous year (+10.7%).53 Some 20.4 million (+11.1%)
Indian tourists travelled abroad in 2015, as compared to 18.3 million in the previous year.54

3.2 Bilateral trade

3.2.1 Trade in goods
In 2016 the bilateral trade flows between Switzerland and India amounted to CHF 15.8
billion55. Over the last 5 years, trade between the two countries had recorded a mixed
trend. Difficult global economic conditions still remnants of the global financial crisis as
well as the strong Swiss Franc had an impact on the trade exchanges. After a record of
CHF 30.2 billion in bilateral trade in 2012, Swiss exports to India had experienced a decline
in 2013 and 2014, but started to rise again in 2015, whereas imports from India went up
during 2013 and 2014 but registered a decline in 2015. In 2016 exports to India declined
severely, i.e. by 30.5 percent. This decrease registered in 2016 is almost solely due to a
decline in exports of gold, precious metals and jewellery (CHF 12.7 billion in 2016 versus
18.8 billion in 2015). In the same year, imports from India grew slightly by 0.9% (see Annex
4).
According to Swiss foreign trade statistics56 India is ranked as the 8th largest destination (4th
largest in 2015) for Swiss exports in 2016 (including gold and other precious metals and
precious stones etc.). Gold and other precious metals, precious stones, etc., constitute
nearly 89 percent of exports to India. Gold trade from Switzerland to India is very variable
since it depends strongly on the global economic situation. On the import side, India was
ranked 26th whilst total trade with India was ranked 9th.
As in the previous year, the major items that Switzerland exported to India in 2016 were:
gold, precious metals and jewellery (-32.5%) 57 , machinery (-6.0%), chemicals (+1.7%),
pharmaceuticals (+1.4%) as well as optical instruments and medical devices (+9.2%). On
the other hand, the main items imported by Switzerland from India during the same period
were chemical (-1.5%), textiles, clothing, shoes (+23.5%), gold, precious metals and
jewellery (-6.0%), agricultural products (-2.3%) and machinery (-2.0%).
India continues to offer business opportunities in many industry and service sectors due to
a large and expanding domestic market. The most promising sectors include clean
energy, energy transmission, power, food and food processing, healthcare, automotive,
transport equipment, MEM (specifically railways and metros), engineering, construction,
chemical, telecommunication, information technology, precision instruments, and consumer
goods. Most of the Swiss companies having presence on the Indian market are happy with
the current development opportunities available here. A revival in the private investment
cycle would help to further strengthen business activities.

3.2.2 Trade in services

Switzerland and India have a strong relationship in terms of trade in services. Tourist arri-
vals from India have been growing steadily for many years, with 599062 overnights spent
by Indians in Switzerland during 2016 (1.2% y-o-y growth).58 A good number of Swiss
companies are active in India in the field of engineering services, either as independent
service provider or part of high-tech machinery supplier. Switzerland is a major market for
52
India Brand Equity Fundation, Economic Survey 2016-17, https://www.ibef.org/economy/economic-survey- 2015-16
53
http://pib.nic.in/newsite/PrintRelease.aspx?relid=157393
54
Latest available data from http://tourism.gov.in/market-research-and-statistics
55
https://www.ezv.admin.ch/ezv/en/home/topics/swiss-foreign-trade-statistics.html (incl. gold) / Swiss statistics
56
https://www.ezv.admin.ch/ezv/en/home/topics/swiss-foreign-trade-statistics.html
57
The percentage increase/decrease is as compared to the year 2015 (see annex 4).
58
Federal Statistical Office, Tourist accommodation statistics 2016,
https://www.bfs.admin.ch/bfs/de/home.assetdetail.1347709.html

10
Indian companies engaged in IT related services. The export of software and other IT-
enabled services from India to Switzerland is estimated to be around USD 2 billion
annually.

4 Direct investments

4.1 Development and general outlook

The yearly foreign direct investment (FDI) inflows to India have grown steadily during
the last ten years, rising from USD 5 billion in 2005-06 to USD 43.5 billion in 2016-17 (see
Annex 5). According to the Ministry of Commerce and Industry, together with reinvested
earnings and other capital, total FDIs into India amounted to USD 60.1 billion in the FY
2016-17.59 These rising inflows to India, which now amount to almost 2.5 percent of GDP,
are driven by a number of factors, e.g. optimistic growth outlook, FDI liberalization in
sectors where investments are needed, and economic reforms in the country.
Cumulative FDI data (incl. reinvested earnings) indicate that foreign direct investments
worth USD 484 billion were made in India during the period April 2000March 2017. Major
foreign investors in India are Mauritius, Singapore, Japan, the UK, the Netherlands, the
USA, Cyprus, Germany, France, the UAE and Switzerland (see Annex 5). Almost all of
these (with the exception of the UK and Cyprus) have seen their total inflow grow by double
digits in the FY 2016-17. A few of these countries are channels to route foreign investment
into India in order to benefit from the tax optimization potential. India recently notified an
amendment in the India-Mauritius tax treaty, and consequently has the right to tax capital
gains on transfer of shares in an Indian entity since April 2017. Similar provisions, including
the limitation of benefit (LOB) clause, are being discussed with some of the aforesaid
countries to prevent investors misusing the treaties and round tripping the funds. The new
structure will streamline the flow of foreign investments into India.
The following sectors attracted a significant share of cumulative FDI inflows during April
2000December 2016: financial and non-financial services 60 (18%), followed by
construction development (8%), telecommunication (7%), computer software and hardware
(7%), automobile industry (5%), pharmaceutical (5%), trading (4%), chemicals 61 (4%) and
power (4%).62
With regard to outbound investments, Indian companies continue to invest abroad to
have access to foreign markets, acquire latest technologies, brands, as well as high-end
talent and secure sources of raw materials. As per data from the Ministry of Finance, the
cumulative amount of (actual) outward direct investments (equity, loan and guarantee
invoked) for the three-year period between April 2014 and April 2017 was worth USD 33
billion. During the same period, the cumulative amount of committed outward direct
investment (equity, loan and guarantee issued) was USD 111.1 billion. Sector-wise, Indian
companies made major investments in manufacturing (29.6%)63, financial, insurance and
business services (27.4%) and wholesale, retail trade, restaurants and hotels (12.9%).
Mauritius, Singapore, the USA, the UAE, Netherlands, UK, and Switzerland were among
the top investment destinations for Indian companies.
As India remains amongst the fastest growing emerging economies, there are a lot of
investment opportunities available for companies. Sectors, such as services, renewable
energy, engineering, defence, life sciences, consumer goods (incl. food processing)

59
The Hindustan Times, Indias FDI inflows at a record $60.1 billion in 2016-17,
http://www.hindustantimes.com/business-news/india-s-fdi-inflows-at-a-record-60-1-billion-in-2016-17/story-
7a8pt2u7e8IJttptDQcwhO.html
60
The service sector includes the following: Financial, Banking, Insurance, Non-Financial / Business,
Outsourcing, R&D, Courier, Tech. Testing and Analysis
61
Other than fertilizers
62
Ministry of Commerce & Industry, Department of Industrial Policy & Promotion, FDI Statistics,
http://dipp.nic.in/foreign-direct-investment/fdi-statistics
63
Representing the share in total outflows of direct investment between April 2014 and April 2017. Source:
Ministry of Finance, Department of Economic Affairs, Overseas Direct Investment, http://dea.gov.in/overseas-
direct-investment

11
transportation infrastructure (incl. railways) and electronics offer greater convergence for
business collaboration.
Nevertheless, the decision of the Indian Government in July 2016 to terminate the
existing Bilateral Investment Protection Treaties (BITs) with all the partner countries
and to renegotiate them based on its new model text does negatively impact the level of
legal protection for foreign investors and does generally increase the hurdles to access
private arbitration.
4.2 Bilateral investment
Switzerland is ranked among the top foreign investors (11th position) in India. As per the
cumulative FDI inflows data available for April 2000-March 2017, Switzerland has
invested some USD 3.799 billion in diverse sectors. As a large part of foreign direct
investment in India, including investment from Switzerland, is routed through other
countries, the actual Swiss direct investment in India is much higher. As per the latest
Swiss National Bank data, Swiss companies made investments worth CHF 8.8 billion in
India between 2000 and 2015.64
Swiss companies present in India have successfully taken advantage of business
opportunities to grow within an overall promising and reforming Indian market environment.
Numerous Swiss companies have established new manufacturing plants in order to
mitigate the consequences of the strong Swiss franc and high import duty in the value
conscious Indian market. There are more than 250 joint ventures / wholly-owned
subsidiaries of Swiss companies operating in India. A major part of Swiss investment in
India has gone into engineering and industrial equipment, services (tourism, financial,
logistics etc.), precision instruments, chemical and pharmaceutical, electrical and
electronics, construction and consumer goods sectors.
Nevertheless, the Bilateral Investment Protection Treaty pertaining to Switzerland has
ceased to be in force in April 2017. However, thanks to a sunset clause, the protection for
existing investments of Swiss based companies will continue for the next 15 years,
while new investments are currently not any more protected. In the meantime, the first
round of re-negotiations of a new BIT between India Switzerland have started.
Switzerland continues to attract more investment from Indian companies looking for a
gateway to Europe. As per data from the Ministry of Finance, outward direct investments
(equity, loan and guarantee invoked) from India to Switzerland worth USD 1.57 billion were
approved between April 2014 and April 2017, making Switzerland the 7th largest recipient
of Indian investments.65 Currently, about 140 Indian companies have a presence in
Switzerland.66

5 Trade, economic and tourism promotion "Country advertising"

5.1 Foreign economic promotion instruments

The Swiss network of representations in India (Embassy, Consulates General, Honorary
Consuls, Swiss Business Hub, Swissnex, Presence Switzerland) continue to engage in
Swiss economic promotion in India and provide advice/services to Swiss companies
operating in the country. Activities consist of classical economic diplomacy and defence of
interests (mainly through the Embassys official contacts with Government and business
associations, door opening, lobbying activities etc.), macroeconomic issues (mainly
reporting on economy, fiscal position and regulatory frameworks, including import-export
policy) and providing specific services to Swiss companies (mainly match-making, market
studies, fairs, industry delegation trips, company setups, information about business
opportunities).

64
Swiss National Bank, Swiss direct investment abroad by country and country group,
https://data.snb.ch/en/topics/aube#!/cube/fdiaustlanda?fromDate=2000&toDate=2015&dimSel=d0(IN)
65
Ministry of Finance, Department of Economic Affairs, Overseas Direct Investment, http://dea.gov.in/overseas-
direct-investment
66
Source: Internal market intelligence done by the SBHI and verified by Zefix

12
The Swiss Business Hub India (SBHI)67, in close conjunction with Switzerland Global
Enterprise and Swiss representations in India, supports more than 100 Swiss SMEs per
year in their efforts to enter or extend their presence in the Indian market by providing free
information, free basic consulting services and tailor-made services through in-house or
third party experts. SBHI, as part of its Location Promotion mandate, also promotes
Switzerland as a competitive business location among Indian investors. The Hub, in close
collaboration with cantonal/regional economic development agencies and Swiss-Indian
Chamber of Commerce, regularly conducts events and meetings to attract Indian investors.
Two Investment Promotion (IP) road shows were hosted in September 2016 and March
2017, together with regional/Cantonal representatives and knowledge partners.

swissnex India, based in Bangalore, is mandated by the Commission for Technology and
Innovation, CTI/ KTI. swissnex India connects Switzerland and India in the fields of
innovation, science, education, and art.68 It acts as a soft-landing platform for young
Swiss entrepreneurs from University spin-offs and the Swiss startups that are coached by
the Commission for Technology and Innovation (CTI) in the Hi-tech domains. Furthermore,
in 2016-2017, swissnex India expedited, for example, Switzerlands Functional Genomics
Centre Zurich (FGCZ) of ETH and UZH and Indias leading innovation institution Centre for
Cellular and Molecular Platforms, C-CAMP, signing a letter of intent to set up the
Bangalore-Zurich Research and Innovation Corridor with the objectives of promoting
collaboration in scientific research, enabling access to each others technology platforms,
encouraging mutual collaborations with local innovation, incubation of common startups at
C-CAMP and FGCZ, and mutual access to specialists at for technology commercialization.
Another successful platform titled the Academia Industry Training (AIT) program is in its
fourth year of successful execution. Top 10 Swiss applied researchers and top 10 Indian
applied researchers (so called Sciencepreneurs) participate in a week-long training with the
aim to support scientists in transforming their high-level applied research into market
application and discovering their entrepreneurial potential.

Under the innovation & entrepreneurship umbrella, swissnex India has focused specifically
on three key themes aimed at promoting entrepreneurship and startups, namely Informa-
tion and Communication Technology (ICT), Medical Technology (Medtech), and Clean
Technology (CleanTech)69. The topics are linked to key developments within the Indian
Government in the last years. In fact, the new federal government in India has given the
Transforming India motto a boost with a slew of reforms aimed at spurring economic growth
and promoting citizen inclusion into governance. These radical transformations have a
solid information technology (ICT) backbone with expanding opportunities. 70

Another flagship initiative of the Indian Government is Startup India, intended to drive
sustainable economic growth and generate large scale employment opportunities through
startups. The National Institution for Transforming India, also called NITI Aayog (ex-
Planning Commission which was re-organised and re-named as NITI Aayog in 2015)
through its programs like AIM (Atal Innovation Mission); ATL (Atal Tinkering Labs) and
SETU (Self Employment and Talent Utilisation) is promoting entrepreneurship at a scale
and magnitude that was previously unheard of. Overarching these programmes, is the well-
known Make in India initiative, which was launched by the Prime Minister in September
2014 as part of a wider set of nation-building initiatives, devised to transform India into a
global design and manufacturing hub.
The developments in India create (potential) opportunities in the Swiss startup
ecosystem, especially since a parallel umbrella initiative has been set-up called
digitalswitzerland (previously: Digital Zurich 2015), a cross-industry association created to
strengthen the countrys position as a digital hub including industries such as fintech, life

67
For website, please see: https://www.s-ge.com/en/company/swiss-business-hub-india
68
swissnex India, input paper (June 2017) for the Economic Report: contribution from Swissnex India/CG Bangalore.
69
Clean Tech driven through sub-themes such as Ed-tech (education), Fintech, IoT (Internet of Things),
Robotics, Healthcare, and others.
70
http://www.swissnexindia.org/: This Economic Annual Report 2016/17 provides a bit more space to swissnex
than in former times to explain in more details its working approach in India, also to illustrate existing synergies.

13
science, medtech, and many more. digitalswitzerland focuses on three key areas:
attracting outstanding digital talent, helping existing companies master digital challenges,
and significantly strengthening the Swiss startup ecosystem. Furthermore, one of the
biggest startup challenge, Kickstart Accellerator, is being driven by digitalswitzerland, and
has entered into a partnership with BaselLaunch (initiated and operated by
BaselArea.swiss) to offer a healthcare-specific vertical. F10 is another Zurich based fintech
initiative that supports and guides startups, all the while stimulating worldwide
collaboration with international finance organizations. SIX, the backbone of the Swiss
financial center, sponsors F10. swissnex India is partnering with all these organisations for
their activities in India (mainly promotion and outreach).
Switzerland Tourisms office in India promotes Switzerland as one of the most attractive
destinations among Indian outbound tourists (detailed figures see chapter 3.2.2.) 71 . It
regularly interacts with the Embassy and the Consulates General to increase the interest for
Switzerland. In March of this year, Switzerland Tourism and the CG Mumbai cooperated to
promote Swiss culture by having a Swiss booth at an annual food festival. Since May 2017,
the Switzerland Tourism office is part of the Swiss Consulate General in Mumbai.
The Swiss-Indian Chamber of Commerce (SICC), headquartered in Zurich, with its four
regional chapters in India (New Delhi, Mumbai, Bangalore, and Pune), works closely with
the Embassy, Consulates General and Swiss Business Hub India to help promote and
strengthen bilateral trade and investment relations. The Swiss-Indian Business Forum
based in Geneva also helps in promoting Swiss-Indian business ties.

The Embassy on Switzerland-India Economic Relations: The 15th Joint Economic

Commission meeting took place successfully on 25th October 2016 in Berne. With regard
to a new Free Trade Agreement, the negotiations between EFTA member states and India
could be reactivated and three rounds took place in the reporting period. The next one is
planned in mid - September 2017 in New Delhi.

Besides these, another highlight was the closing ceremony of the Year of Swiss
Innovation 72 , in November 2016, which was organized by the Swiss Embassy in New
Delhi, in close cooperation with its network partners and with financial support from many
Swiss and Indian companies. Another recent example of a joint participation at a
promotional event for Swiss products was the Smart Cities Expo which was organised by
Exhibitions India Group and took place in Delhi from 10 to 12 May 2017. Swiss Smart Cities
technologies and services were jointly promoted in the Indian market through five
participating Swiss organisations, namely the Swiss Cooperation Office (SCO), Swiss
Business Hub India (SBHI), swissnex, Presence Switzerland (PRS) and the Embassy.

Outlook: The Embassy has taken a new biennial initiative for 2017 and 2018: 70 Years
of Swiss-Indian Friendship: Connecting Minds Inspiring the Future, to take
Switzerlands image further and to present cutting edge innovations where Switzerland and
Indian can mutually benefit. The new initiative is in commemoration of the 70th
anniversary of the bilateral friendship treaty signed in 1948. This will provide an
excellent opportunity to organize numerous missions and events to further strengthen the
good bilateral economic relations between the two countries.
The Official visit of the President of the Swiss Confederation, Mrs. Doris Leuthard, to
India, from 31st August to 1st September 2017, will be the upcoming highlight of this
year.

5.2 The host country's interest in Switzerland

Tourism: Switzerland remains among the top destinations for outbound Indian tourists.
In 2016, 265410 Indian citizens visited Switzerland and generated 599062 overnights.
Last year, the Swiss Embassy Delhi issued 100161 Schengen visa, which represents

71
Tourist arrivals from India were growing steadily with around 600000 overnights spent by Indians in
Switzerland during 2016.
72
more details, see the Embassys website (Nov 2016 event)

14
 around 15% of all the Schengen visa issued by European Embassies in India. During
the last three years, an organizational centralization of Swiss visa offices took place in
New Delhi, while an external Service Provider being present with offices in 12 main
cities 73 of India provides the front organization and transmits the submitted visa
applications daily to the Embassy.

Investments: Switzerland and Europe continue to be attractive markets for Indian

companies despite some current political and economic difficulties faced by the region.
Switzerland Global Enterprise and the SBHI have also intensified its engagement to
attract potential Indian investors to come to Switzerland. Switzerlands initiatives to
remain competitive such as the introduction of the Swiss Innovation Parks are ensuring
the interest of Indian and foreign companies alike to consider the country as a good
base for European operations. Recent Indian investments in Switzerland have gone into
sectors such as ICT, big data, life sciences, engineering, and chemicals. The activities
conducted by Indian companies in Switzerland range from business development to
R&D and IP management.

Education and skills development: The number of students interested in studying at

Swiss Universities has increased in the past few years, and there were 857 Indian
students in the Swiss university system in 2016 (up from 853 in 2015). This does not
include Indian students in the management and hospitality schools which attract a lot of
Indian students as well. India is a priority country in terms of federal scholarships
granted to students, with some 10 to 25 scholarships reserved for Indian students.

Research, Innovation, Start-up Promotion, Vocational Training:

The Indo-Swiss Joint Research Programme (ISJRP) supports cutting edge research
that brings together faculty and students from Switzerland and India. A call for
proposals in the areas of translational medical research and medical devices; and
renewable energy research attracted 66 proposals in 2016. Out of these, 11 proposals
have been funded with a contribution of 2 million CHF from the Swiss side, which was
matched by the Indian side. Discussions are going on with the Department of Science
and Technology of the government of India to issue another call for proposals in 2017.
The ISJRP in the social sciences supports collaborative research in this field. A call for
proposals for scholars exchange grants in 2016 attracted 25 proposals which are
currently being evaluated.
Entrepreneurship and innovation at swissnex India have empowered 205 Swiss
start-ups thus far through various innovative platforms, among which the Startup Tour
Bangalore, Academia Industry Training and the organisation of visits to India for
specialised delegations such as for the space and med-tech start-ups were the most
prominent ones. Thirty-seven start-ups have already successfully entered the
Indian market.
The Indian innovation and startup ecosystem is either thought to be self-sufficient, or
inspired by the USA courtesy the reverse brain-drain of returning successful Indians
from the Silicon Valley. The present problems being solved by young startups in India
are grassroot level problems and the young entrepreneurs are prone to emulate
successful global ideas, by and large fine-tuning an existing model to serve local needs.
On the challening side, a recent study, "Entrepreneurial India", by the IBM Institute for
Business Value and Oxford Economics claims that 90% of Indian startups fail within
the first five years. The venture capitalists, who were surveyed argued that Indian
startups lack new technologies or unique business models. Government initiatives
discussed previously such as Make in India, the Startup India program, and other
incubation programs have definitely spurred growth, but it is no secret that innovation
still remains the biggest challenge in the Indian startup ecosystem. Also, Indian
researchers and scientific startups lag behind drastically in filing patents. The

73
The 12 locations to file applications for a Schengen visa related to the Swiss Embassy are: New Delhi,
Mumbai, Pune, Ahmedabad, Chennai, Bangalore, Punducherry, Hyderabad, Chandigarh, Jalandhar and
Kolkata)

15
 resultant is that several international corporates have started their own innovation
programs centered in India (Cisco, Socit Generale, Microsoft Ventures, Gennext
Ventures, Target, Paypal, Citrix, NetApp, Lowes, T-Labs (Times group), Pitney Bowes,
etc.) to curate, train and then acquire external innovations from India.

Skills Development and Vocational Training: The Swiss Vocational Training (VET)
system was introduced in India, through a pilot project implemented during the years
2009-2011, in cooperation with a number of Indian subsidiaries of Swiss companies.
This training model has since been transferred to a private self-sustainable model in
India. Importantly, Switzerland and India have signed a Memorandum of Understanding
in 2016 to establish formal cooperation in the fields of skills development and vocational
and professional education and training. The First Joint Working Group (JWG) meeting
foreseen by the MoU took place in New Delhi on 21 April 2017. Potential areas of
cooperation, including cooperation in curriculum development, training of trainers,
familiarization visits to Switzerland and research were identified.

Switzerland as a financial centre: Indian companies engaged in external trade have

been using the Swiss banking system for business transactions. Corporate India is well
informed about Switzerland as a good base for fund raising by issuing Swiss franc
denominated bonds via SIX (Swiss Stock Exchange). In addition, private equity funding
in India becomes more and more important for Swiss financial institutions.
Further, the third round of the bilateral Financial Dialogue between India and
Switzerland was held in June 2016 in New Delhi and November 2016, the new Joint
Declaration on the Automatic Exchange of information (AEOI) on reciprocal basis
between India and Switzerland could be signed, which marks an important milestone
and change with regard to our bilateral relations in tax matters. As per the latest data
(2016) of the Swiss National Bank, the Indian assets in Swiss banks recorded however
a decline, probably already as consequence to the upcoming stricter laws and
regulations being introduced in the context of the AEOI in tax matters. Generally, all
leads to a continuous positive change in Switzerlands image in India, away from being
known as tax haven.

Health / Ayurveda: India is keen to examine how Ayurveda and Yoga can be further
promoted in and out of Switzerland (globally). The Indo-Swiss Ayurveda Foundation
(ISA) is supporting the efforts of the Government.

Working Permits: With regard to the IT-sector, India asks regularly for more working
permits, while taking into account the existing regulations at Federal and Cantonal level
in Switzerland.

16
Annexes:
1. Economic structure table
2. Main economic data table
3. Trade partners table including Switzerland
4. Bilateral trade table
5. Main investing countries table including Switzerland

17
ANNEX 1

Economic structure

Fiscal Year 2015-16 Fiscal Year 2016-17

Distribution of GDP*

Agriculture & Allied sector 15.4 % 15.1%

Industry sector 31.4 % 31.1%

Services sector 53.2 % 53.8%

- of which public services 12.3 % 12.8%

*Based on Gross Value Addition (GVA) at Basic Prices (2011-12 prices). The new
calculation formula was adopted effective fiscal year 2013-14.

74
Fiscal Year 2011-12 Fiscal Year 2013-14

Distribution of employment

Primary sector 53.8 % 48.3 %

Secondary sector 19.3 % 22.4 %

Tertiary sector 26.9 % 29.3 %

Sources: Ministry of Statistics & Programme Implementation, India

http://mospi.nic.in/data
Labour Bureau, India
http://labourbureau.nic.in/reports.htm

74
The latest data available at the moment.

18
ANNEX 2

Main economic data

2016* 2017* 2018*

GDP (USD bn) 2288.715 2487.937 2'724.756

GDP per capita (USD) 1747.493 1874.938 2'026.744

Growth rate (% of GDP) 6.83 7.18 7.69

Inflation rate (%) 5.29 5.33 5.54

Current account balance (% of GDP) -1.51 -2.08 -2.15

*estimates
Source: IMF, World Economic Outlook (April, 2017)
http://www.imf.org/external/pubs/ft/weo/2017/01/weodata/weoselgr.aspx

2015-16 2016-17 (est.) 2017-18 (est.)

Fiscal balance (% of GDP) -3.9 -3.5 -3.5

Total external debt (% of GDP) 23.4 22.9 22.7

Debt service ratio (% of current account

8.8 7.8 7.9
receipts, excluding grants )

Reserves (months of imports) 8.6 8.1 7.9

Source: IMF, Article IV Consultation (February, 2017)

https://www.imf.org/~/media/Files/Publications/CR/2017/cr1754.ashx

2012-13 2013-14 2015-16

75
Unemployment rate (%) 4.7 4.9 5.0

Source: Labour Bureau, Indian Ministry of Labour and Employment

http://labourbureaunew.gov.in/UserContent/ILS_2015.pdf?pr_id=R16a%2b2lYOw4%3d

75
N.B. Of the 484 million workers estimated in 2011-12, only about 30 million are in the formal sector. The rest,
i.e. 93%, are employed in the informal sector. (Source: Economical and Political WEEKLY, Vol LII No 22, June 3
2017)

19
 ANNEX 3 CH@WORLD module: A352

Trade partners: April 2016 March 2017

Indias trade

Rank Country Exports Share Change Rank Country Imports Share Change
76
from the host to the host
country country (USD
(USD million) million)

1 USA. 42331 15.3% 5.0% 1 China 61286 15.9% -0.7%

2 U.A.E 31,306 11.3% 3.4% 2 USA. 22344 5.8% 2.6%
3 Hong Kong 14158 5.1% 17.1% 3 U.A.E. 21498 5.6% 10.6%

4 China 10197 3.7% 13.2% 4 Saudi Arabia 19945 5.2% -1.9%

77
5 Singapore 9569 3.5% 24% 5 Switzerland 17249 4.5% -10.6%

6 U.K. 8561 3.1% -3.0% 6 Indonesia 13437 3.5% 2.3%

7 Germany 7213 2.6% 1.7% 7 South Korea 12593 3.3% -3.5%
47 Switzerland 980 0.35% 0.3% 8 Iraq 11702 3.0% 8.0%

EU 47019 17.0% 5.8% 9 Germany 11584 3.0% -4.2%

EU 42364 11.0% -3.5%
Total 276280 100 % 5.3% Total 384319 100 % -0.9%

Source: Department of Commerce, Indian Ministry of Commerce and Industry

http://commerce.nic.in/eidb/default.asp

76
Change from the previous year
77
Inclusive of gold bars and other precious metals, coins, precious stones and gems etc.

20
ANNEX 4 CH@WORLD module: A750
Bilateral trade

Export Change (%)*** Import Change (%)*** Balance Volume

(CHF million) (CHF million) (CHF million) (CHF million)
2005 1369 34.3 652 19.1 717 2021
2006 1888 37.8 736 12.8 1152 2624
2007 2303 22.1 949 29.0 1354 3252
2008 2406 4.5 1101 16.0 1305 3507
2009 2156 -10.4 800 -27.4 1356 2956
2010 2561 18.8 1010 26.2 1551 3571
2011 2983 16.5 1304 29.2 1679 4287
2012* 28713 *) 1450 *) 27263 30163
2013 23980 -16.5 1540 6.2 22440 25520
2014 19'342 -19.3 1'628 5.7 17'714 20'970
2015 20'613 6.6 1'464 -10.1 19'149 22'077
2016*** 14325 -30.5 1'478 0.9 12848 15803
(Total 1)** 1'619 -9.6 1'281 2.0 337 2900
2017 (IV) 7'243 74.8 526 -8.5 6717 7769
*) The Swiss Customs Administration made changes to the way it calculates imports and exports as of 1
January 2012. Since then, comparisons between 2012 and the previous years have no longer been
78
possible.
**) "Economic" total (total 1): without gold bars and other precious metals, coins, precious stones and gems,
works of art and antiques
***) Change (%) from the previous year

Exports 2015 2016

(% of total) (% of total)
1. Gold, precious metals, jewellery 91.3 88.7
2. Machinery 2.8 3.9
3. Chemicals 1.5 2.3
4. Pharmaceuticals 1.1 1.7
5. Optical instruments and medical devices 0.7 1.2

Imports 2015 2016

(% of total) (% of total)
1. Chemicals 29.6 28.9
2. Textiles, clothing, shoes, umbrellas 18.9 23.1
3. Gold, precious metals, jewellery 15.2 14.1
4. Agricultural products 8.2 7.9
5. Machinery 6.7 6.5

Source: Swiss Customs Administration SCA, statistique du commerce extrieur (2016).

21
ANNEX 5 CH@WORLD module: A356

Main investing countries

Foreign Direct Investment to India

Period: April 2000 March 2017

Inflows over
Direct investments 79
Rank Country Share Variation past year
(Total Inflows in USD million)
(USD million)
1 Mauritius 111638 33.6% +16.4% 15728

2 Singapore 54590 16.4% +19.0% 8711

3 Japan 25675 7.7% +22.5% 4709

4 U.K. 24591 7.4% +6.4% 1483

5 Netherlands 20682 6.2% +19.4% 3367

6 U.S.A. 20323 6.1% +15.6% 2739

7 Germany 9698 2.9% +12.4% 1069

8 Cyprus 9156 2.8% +7.1% 604

9 France 5725 1.7% +12.0% 614

10 U.A.E. 4705 1.4% +16.7% 675

EU 73210 25% +11.0 % 7280

11 Switzerland 3799 1.1% +15.7% 515

Total 332112 100% +15.1% 43478

Source: Department of Industrial Policy and Promotion, Indian Ministry of Commerce and Industry
http://dipp.nic.in/English/Publications/FDI_Statistics/FDI_Statistics.aspx

79
Change from the previous year

22