Embassy of Switzerland

Ref. 512.0/FDL-NMO
New Delhi, May 20th, 2010

Annual Economic Report

2009 - 2010

1 Appreciation of the economic problems and issues

• The Indian economy has seen a remarkable turn-around after bearing the impact of the
global economic slowdown that started in September 2008, and is currently experiencing
a time of renewed optimism with growth momentum picking up gradually in the recent
months. According to government’s estimate, the Indian economy has grown by 7.2
percent during fiscal year 2009-10 (FY 2010)1, an increase from 6.7 percent growth in FY
2009. The industry sector has witnessed excellent rebound this year. The cumulative
growth for FY 2010 works out to 10.4 per cent, against 2.8 per cent in FY 2009. The fiscal
stimulus measures taken by the government, together with a loosening monetary policy,
have helped in pushing up the overall GDP growth. However, the recovery is still
unbalanced. The services sector is expected to have grown by 8.7 percent, marginally
lower than previous year’s 9.8 percent growth. On the agricultural front, the production
has been impacted by an erratic monsoon resulting in growth of (-)0.2 percent against 1.6
percent growth achieved in FY 2009.
• Though the stimulus packages have pepped up economic activities, these measures
have also contributed to an increased fiscal deficit (6.8 percent of GDP), the highest in
this decade. The combined fiscal deficit (Centre and States) comes to 10.5 percent. For
the new fiscal year, the government is planning to reduce the fiscal deficit by 1.3 percent.
• The FY 2010 seems to have also run up a high current account deficit (4.1 percent of
GDP) even as the rupee appreciated by 11 per cent against US dollar during this period,
mainly on account of high capital inflows.
• The rapid recovery in the economy has also brought forth the challenge of higher
inflation. The wholesale price index in February was 9.89% higher than a year earlier.
Reserve Bank of India (RBI) is following a calibrated approach. From an accommodative
monetary policy beginning September 2008, the RBI has embarked on a phased exit,
keeping in mind two main challenges - restraining inflationary pressures, and ensuring
adequate liquidity at reasonable cost to sustain the current growth momentum.

1 st st
The Indian fiscal year runs from 1 April to 31 March.

1
• The macroeconomic fundamentals are still strong, e.g. solid foreign reserves at USD
254 billion, high gross domestic saving rate (34 percent of GDP) and investment rate (36
percent). A large domestic market, with young population having rising disposal
incomes, provides India greater resilience compared to many other emerging economies.
The country has been able to add some 0.8 million new jobs during the period September
2008 - December 2009, according to a government survey. India has been able to
marginally improve its position in the World Economic Forum’s Global Competitive
Ranking 2009-10 to 49th rank from 50th rank in the previous year. It is still very much
behind China (29th rank) but ahead of Brazil (56th rank) and Russia (63rd rank). The
continued buoyancy in foreign capital inflows into India indicates that it remains an
attractive destination for foreign investors. Indian economy grew annually by plus 9
percent over the last three years which has helped India to strengthen its economic
weight in global affairs.
• The consumer and producer sentiments in the country have once again become upbeat
(e.g. industrial, exports and agricultural growth further picking up). The investor sentiment
in India has been one of the highest among the Asian economies because of the robust
domestic consumption and growth optimism, that is supported also by a global
recovery. Now, most estimates indicate that India is heading for 8 percent growth in FY
2011. The sectors offering good business opportunities include consumer goods, capital
goods, construction, telecommunication, information technology, infrastructure, financial
and non-financial services, etc.
• The business conditions are still below optimal. The infrastructure bottlenecks,
superfluous administrative controls, corruption, rigid labour laws, high interest rates,
shortage of skilled labour in some sectors, are some of the areas of concern. As India
moves to sustain vibrant economic growth to meet its “inclusive growth” objectives, it
definitely needs to invest heavily in both human and physical infrastructure.
• The downside risks to Indian economy include the high fiscal deficit and inflation,
which pose threat to the sustainability of the current growth momentum. Furthermore, the
announced curtailment in government spending will reduce the contribution of
government demand to GDP growth unlike in the previous years when higher
government spending helped to push up the overall demand.
• The government has been cautiously managing the macroeconomic conditions so that
economic growth can be sustained. However, implementation of necessary structural
reforms in the economy is still too slow. The government has announced to implement
two key economic reforms, a uniform Goods and Services Tax (GST) and a Direct Tax
Code to be introduced effective April 2011. There are some indications that the
Commerce and Industry Ministry will try to build public consensus to further open up
“politically sensitive” sectors, such as defence, multi-brand retail, agriculture etc.

2 International and regional economic agreements

2.1 Country’s policy and priorities

• India continues its policy of strengthening trade and economic cooperation with its major
trading partners. At present, India has a Free Trade Agreement (FTA) / Preferential
Trade Agreement (PTA) / Comprehensive Economic Cooperation Agreement (CECA) /
Comprehensive Economic Partnership Agreement (CEPA) with countries such as Sri

2
 Lanka, Nepal, Chile, Singapore, South Korea, and trading blocs - ASEAN, SAFTA and
MERCOSUR.
• The European Union and the United States remain amongst the most important trading
and investment partners of India. Therefore, India is interested to increasingly
institutionalise its trade and economic promotion dialogue with EU and USA. Recently,
India and US Trade Ministers have signed “Indo-US Trade Policy Forum Framework for
Cooperation on Trade and Investment”. Both sides also announced the launch of “India-
US Financial and Economic Partnership”. Its stated aim is to strengthen bilateral
engagement and understanding on macroeconomic, financial sector and infrastructure-
related issues.
• India and ASEAN signed in August 2009 a FTA in goods within the framework agreement
(CECA). It became effective from January 1, 2010 between India and some ASEAN
countries (those who were able to complete their internal procedures). Apart from
commercial and economic aspects, both India and ASEAN are looking to build stronger
strategic geopolitical advantage, leveraging the emerging free trade relationship. For
India, it is important to become more involved with ASEAN, as ASEAN+3 (China, Japan,
and Korea) bloc is already progressing.
• India-Korea CEPA has the distinction of India’s first such agreement with an OECD
country, and the second comprehensive agreement signed by India, after its 2005 CECA
with Singapore. Under the trade agreement for goods, which is implemented effective 1st
January 2010, India has placed 104 items at zero duty and 962 items at preferential duty.
• India is also a member of the Asia-Pacific Trade Agreement (APTA). APTA is a
preferential tariff arrangement that aims at promoting intra-regional trade through
exchange of mutually agreed concessions by member countries. It has five members
namely Bangladesh, China, India, Rep. of Korea, and Sri Lanka. The Framework
Agreements on Trade Facilitation, Services and Investments have been agreed upon,
and the negotiations are still going on in the areas of tariff concessions and non-tariff
measures.

Main ongoing negotiations

• India is currently negotiating FTAs with many trading partners in both the developed and
developing world.
• EU and India have held nine rounds of negotiations on a broad-based investment and
trade agreement. Reportedly, the non-trade related chapter on “sustainable development”
has emerged as the biggest stumbling block to an agreement. Even chapters on
government procurement and intellectual property rights also remain highly contentious.
India has also raised the issue of asymmetry of tariff liberalisation in its favour, citing the
different levels of development between India and EU. Both sides have agreed to give
the necessary impetus for completion of negotiations before the end of 2010.
• Negotiations for an EFTA-India broad-based Trade and Investment Agreement are
currently going on, and four rounds of negotiations have been held so far.
• After the India-Sri Lanka Free Trade Agreement that is operational since March 2000,
both sides have been negotiating on a CEPA.
• After India-ASEAN FTA in goods has become operational, negotiations for a FTA in
services and investment cooperation are continuing, surpassing the earlier deadline to
conclude negotiations by December 2009.
• The implementation of the South Asian Free Trade Area (SAFTA) continues to be slow.
This regional association has earlier called for a wider economic agreement that would

3
 also cover services and investment. Some hitches still remain given the peculiar geo-
political relations between India and Pakistan.
• Similarly, within the Framework Agreement on the BIMSTEC Bangladesh, Bhutan, India,
Myanmar, Nepal, Sri Lanka, and Thailand have completed negotiations on tariff
reductions/elimination in goods. Negotiations on services and investment agreement are
under way.
• India and Thailand are continuing negotiations, albeit on a slow pace, for a FTA in goods,
as a part of their broader framework agreement to cover trade in goods, services,
investment, and areas of economic cooperation.
• India is also conducting negotiations or feasibility study for free trade agreements with
many other countries, e.g. Australia, Japan, Canada, New Zealand, Israel, Indonesia,
Malaysia, Nigeria, and blocs - GCC and SACU.

2.2 Outlook for Switzerland (potential for discrimination)

• The ongoing negotiations for an EFTA-India broad-based Trade and Investment
Agreement have been successful so far. India’s parallel negotiations with the EU for a
similar agreement seem to be more complex as compared to EFTA-India negotiations.
• A prospective Asian regional preferential trade arrangement and, specifically, an India-
Japan FTA will create in the medium to long term more competition for Swiss exporters.

3 Foreign trade
3.1 Development and general outlook

3.1.1 Trade in goods

• India’s foreign trade of merchandise has been adversely affected since the onset of the
worldwide recession. However, with global economy showing some recovery in the
recent months, there are improvements in India’s external trade as well. According to the
provisional trade data available for the FY 2010, India’s merchandise export is estimated
to have declined by 4.7 percent, reaching USD 176.5 billion. Import also declined, by 8.2
per cent reaching USD 278.6 billion, as compared to the previous fiscal year. The
scenario was quite bleak in the first half of FY 2010. However, the situation has improved
since then with India’s exports witnessing an average monthly growth of 27 percent
during December ’09 to March ’10, and also its imports registering an average monthly
growth of 49 percent in the same period.
• As per the WTO list (2009), India has been able to improve its position in the list of
leading merchandise importers to 15th from 17th rank in 2008, and its position in the list of
leading merchandise exporters to 22nd rank from 26th rank in 2008. India is certainly
getting more integrated with the global economy, as is also shown by its trade/GDP ratio,
which gradually went up from 22.8 percent in FY 2001 to 38.6 percent in FY 2008.
• According to commodity-wise data available for the first 5 months of FY 2010, the major
import items in India were petroleum products (-43 percent)2, gold, gems and jewellery (-
28 p.c.), electrical machinery and electronics products, including computer software (-18
p.c.), other machinery (-26 p.c.) and chemicals (-28 p.c.). On the export front, the major
items traded by India were engineering goods (-34 percent), chemicals, pharmaceuticals

2
The figures in brackets are the percentage increase/decrease as compared to 5 months of FY 2009.

4
 & related products (-21 p.c.), petroleum products (-49 p.c.), textiles & related products (-
13 p.c.), agricultural and allied products (-33 p.c.).
• EU and USA remain the major trading partners of India. As per the detailed trade data
available for the first 5 months of FY 2010, they bought 20 percent and 11 percent
respectively of India’s exports. With regard to Indian imports, they have shares of 14
percent and 6 percent respectively. China, with a share of 12 percent, is the second
largest supplier to Indian market.
• India still maintains a relatively high import tariff regime and its import procedures need to
be further simplified. Reportedly, the share of import duties in India’s total tax revenue is
17.1 percent (FY 2009) as compared to 6.5 percent in China. Import duties still are an
important source of government’s revenue but they hinder a deeper market penetration.
Overall, the Indian market has been gradually opening up. This year, the special
additional duty on some products has been abolished.

3.1.2 Trade in services

• The global financial and economic downturn made an impact on India’s trade in services
as well. According to the WTO data for the year 2009, India’s commercial services export
amounted to USD 86 billion ($106 billion in 2008) and its import amounted to USD 74
billion ($91 billion in 2008). India’s position among top exporters of commercial services
slipped from 9th to 12th rank, and its position among the leading importers remained at
12th rank, the same as in 2008.
• The aforesaid downfall in export of services was evident in almost all major sectors.
However, the IT-BPO industry showed some resilience during the crisis, as its export
dropped by just 1.7 percent, clocking revenues of US$ 34.8 billion, during April-
December 2009.
• Based on FY 2009 data, the major sectors contributing to India’s services export were:
IT-related services (46 percent share), Business services3 (16 p.c.), Transport services
(11 p.c.), Travel services (10.6 p.c.), Financial services (4 p.c.), and Communication
services (2 p.c.). The major sectors constituting India’s services import were: Business
services (30 p.c.), Transport services (25 p.c.), Travel services (18 p.c.), Financial
services (6 p.c.), and IT-related services (5.4 p.c.).
• The performance of the tourism sector has been impacted by the global economic
downturn. The foreign tourist arrivals were 5.11 million during the year 2009 as compared
to 5.28 million during the year 2008, registering a decline of 3.3 percent. Consequently,
the foreign exchange earnings from tourism also went down to USD 11.39 billion ($11.75
billion in 2008). The growth of the outbound Indian tourists was also subdued due to
economic downturn.

3.2 Bilateral trade

3.2.1 Trade in goods

• Swiss-Indian bilateral trade grew robustly during the period 2003-2008, nearly trebling
from CHF 1.24 billion to 3.5 billion in five year. However, due to global economic
slowdown, the growth could not be sustained in 2009, and Swiss exports to India
plummeted by 10.4 percent as compared to previous year and its imports from India also
declined by 27.4 percent in the same period. As per provisional data available now, the

3
Business services include management consultancy, engineering, technical services etc.

5
 declining trend has been reversed in the year 2010, with Swiss export to India going up
by 16 percent to CHF 610 million during the first quarter as compared to first quarter
2009. Similarly, the Swiss import from India has also gone up by 2 percent as per the
said quarterly data.
• The major items that Switzerland exported to India during 2009 were: machinery (-12
percent)4, pharmaceuticals (+5 p.c.), pearls, jewellery and precious metals (-27 p.c.),
chemical products (-5 p.c.), precision instruments (-1 p.c.), and watches (-11 p.c.). On the
other hand, the main items imported by Switzerland from India during 2009 were
chemical products (-24 percent), textiles (-8 p.c.), agricultural products (-6 p.c.), pearls,
jewellery and precious metal items (-70 p.c.), and transport equipment (+78 p.c.).
• As per the Indian trade data available for the first 5 months of FY 2010, Switzerland’s
share in Indian exports went down to 0.3 percent from 0.4 per cent in previous year.
Switzerland is the major supplier of gold and silver to India, and during the said period, its
share in India’s total imports was high at 4.1 percent (4.5 per cent during the first 5
months of FY 2009).
• India offers big business potential in many industry and service sectors due to a large
untapped domestic market. The sectors offering good business prospects are
automotive, engineering, chemical and pharmaceutical, power, telecommunication,
healthcare, precision instruments, food processing, consumer goods, and infrastructure.

• 3.2.2. Trade in services

India remains an important emerging market for Swiss tourism. During 2009, Indian
tourists spent 324,280 overnights in Switzerland (327,300 in 2008), a marginal decline of
0.9 percent. Another area of bilateral trade in services, software and IT-enabled services
is doing well as India remains an attractive outsourcing destination. During the FY 2009,
the export of software and IT-enabled services from India to Switzerland is estimated to
have slightly fallen from US$ 375 million recorded in previous fiscal year.

4 Direct investments (and portfolio investments if available)

4.1 Development and general outlook

• India’s buoyant economic growth even during the time of global financial and economic
crisis and a big untapped business potential available in the country have been the key
factors to ensure continued foreign direct investment (FDI) inflows. FDI inflows during the
first 11 months of FY 2010 amounted to USD 24.68 billion as compared to inflows of USD
25.39 billion in the same period of FY 2009. This is despite the fact that UNCTAD World
Investment Report 2009 had noted a fall of global FDI inflows, from USD 1.7 trillion in
2008 to USD 1.2 trillion in 2009. The attractiveness of India as an investment destination
has been gradually improving over the past few years. A major stimulant is the relatively
higher return on equity invested by foreign companies here.
• As per the cumulative FDI data available, foreign direct investment (equity capital only)
worth USD 110.76 billion were made in India during the period from April 2000–
December 2009. The major foreign investors include Singapore, EU, USA, Mauritius,
Japan, Cyprus, and Germany. Mauritius is the largest foreign investor in India but mainly

4
The figures in brackets are the percentage increase/decrease as compared to the year 2008.

6
 because it is a ‘routing point’ for foreign companies to avail better tax benefits. Similar is
the case with Cyprus.
• The following sectors attracted the major share of FDI cumulative inflows (April 2000-
December 2009): financial and non-financial services (22 percent), followed by computer
software and hardware (9 p.c.), telecommunication (8 p.c.), housing and real estate (8
p.c.), construction, incl. highways (7 p.c.), power (4 p.c.), automobile (4 p.c.), and
metallurgical industries (3 p.c.).
• Foreign Institutional Investors (FIIs), which made a fairly large exit from the Indian stock
markets in FY 2009, have made a comeback this year. FIIs have registered net inflows of
capital amounting to USD 20.5 billion during the first three quarters of FY 2010, against
net outflows of USD 12.4 billion during the corresponding period of previous fiscal year.
• Indian companies continue to explore the complementarities abroad, e.g. to have access
to foreign markets, access to high-end talent, secure source of raw materials, or to find
mutually beneficial manufacturing resources in foreign countries. During the FY 2009, the
outward FDI remain high at $16.07 billion, but there was a decrease of 11.6 percent from
$18.1 billion in the previous fiscal year. During the first three quarters of FY 2010, Indian
companies have invested USD 8.4 billion abroad, as compared to USD 12.7 invested
during the corresponding period of previous fiscal year, showing a decline of 34 percent.
Some of the countries which have attracted major investments (excluding energy sector)
by the Indian companies in recent years are US, UK, Netherlands, Australia, Singapore,
UAE, and Mauritius. Sector-wise, these outbond investments have gone into automotive,
metals, energy, chemical and pharmaceutical, engineering, information technology /
software services, and other services, like financial services, shipping services etc.

4.2 Bilateral investment flows

• Switzerland remains amongst the top foreign investors in India. As per the cumulative
FDI inflows data available for April 2000-December 2009, Switzerland is the 11th largest
foreign investor, investing some USD 921 million. During the calendar year 2009, Swiss
companies invested $143 million in India in diverse fields. As a large part of foreign direct
investments in India, including investment from Switzerland, is routed through Mauritius,
the actual Swiss direct investment in India is much higher. The total Swiss direct
investment inflows into India is estimated to be above $4 billion during April 2000-
December 2009.
• There are about 150-160 joint ventures / wholly-owned subsidiaries of Swiss companies
operating in India. In terms of industry-wise distribution of Swiss collaborations in India,
the traditional sectors of Swiss excellence, e.g. engineering and industrial equipment,
services (tourism, financial, logistics etc.), chemicals and pharmaceuticals, precision
instruments, continue to maintain top positions.
• As the Indian economy continues to grow better than many other emerging economies
and the future prospects are bright, the Swiss companies operating in India remain
confident about its excellent market potential and most of them have planned to expand
in the near-to-medium term. For new entrants, they need to explore business
opportunities in various sectors, e.g. engineering, chemical products, consumer goods,
food processing, financial services, biotechnology, energy including renewable energy,
healthcare, and information technology related services.

7
5 Trade, economic and tourism promotion "Country advertising"

5.1 Foreign economic promotion instruments5

• The exchange of high level visits between Switzerland and India was less intense in FY
2010 as compared to the previous years. The visit of Federal Councillor Doris Leuthard in
Delhi September 2009 was in multilateral context on the occasion of the WTO Mini-
Ministerial convened by India. Moreover, the World Economic Forum in Davos in January
2010 offered a good platform to hold informal bilateral meetings between various
stakeholders from the two countries.
• The Economic and Commercial Department of the Swiss Embassy, Swiss Consulate
General in Mumbai, and the Swiss Business Hub (a network partner of OSEC Business
Network Switzerland), located in Mumbai and Delhi, continue to engage in Swiss
economic promotion in India and provide services to the Swiss companies. Additionally,
services are also provided by three Honorary Consuls in Chennai, Kolkata, and
Bangalore.
• Activities consist of classical economic diplomacy (mainly through Embassy’s official
contacts with the 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 microeconomic issues (mainly
match-making, market studies, fairs, informing about business opportunities, including
reporting on select sectors).
• The Swiss Business Hub/OSEC organises events focused on select sectors and
consultative meetings to help Swiss companies in having more knowledge about India’s
business potential. Over the recent years, there has been an increase in the number of
mandates given by Swiss SMEs to Osec/SBH for market study and/or business partner
search.
• “Switzerland. Trade & Investment Promotion” (STIP), which is a part of Osec since
beginning of 2008, organized two large road shows with a number of investors’ seminars
in important Indian cities during 2009-10. Also in 2010-11, several STIP
seminars/conferences/events will take place to apprise Indian companies about
Switzerland’s attraction as an investment and business destination.
• The Economic Cooperation and Development Division of SECO has been active in India
for the last 30 years. SECO’s approach is mainly focused on innovative initiatives along
with its strong orientation to private sector development. It is envisaged that the
backbone for future private sector development in India is the SME’s which contributes to
manufacturing and employment substantially. Some of the current initiatives in India are
in the fields of Value Chain development; Electronic Waste recycling including plastic;
Sustainable, Competitive, Responsible Enterprises (SCORE), and Ecologically
Sustainable Business Growth (Green House Gas Inventory in industries).
• The Swiss Agency for Development and Cooperation ( SDC) has been active in India
since 1963 with development cooperation programmes and humanitarian aid
interventions designed to improve the living conditions of poor and marginalized
segments of the population and to contribute to sustainable development. Considering
the fast growing importance of India as a key actor on the regional and international
scene, the availability in India of financial and human resources to address the challenge

5
India is a priority country in Switzerland’s Foreign Economic Strategy (2006)

8
 of poverty and sustainable development, as well as the importance to build on more than
45 years of development cooperation in India, SDC in 2006 decided to engage into a new
type of collaboration with India. This new Programme involves a shift from
traditional/classical development cooperation, towards a collaboration based on common
interests, on joint ventures and shared investments in the area of climate change. The
Global Programme on Climate Change in India will focus on promoting climate change
adaptation, climate resilient development, energy efficiency and renewable energy. Local
governance is being supported with a focus on exchange of experiences, lessons and
relevant practices across South Asian nations and Switzerland. Humanitarian aid in India
will have emphasis on disaster preparedness and disaster risk reduction. A key feature of
the reoriented SDC Programme in India will be knowledge management and south-south
cooperation to promote and facilitate the generation, access to, and exchange of
knowledge among development partners in India and beyond, at the regional and
international levels.
• Switzerland Tourism, through its offices in New Delhi and Mumbai, is active in India to
attract greater number of Indian outbound tourists and works in close cooperation with
the Embassy and the Consulate General to increase the interest for Switzerland as a
location for tourism. As per April 1, 2010, ST has a Swiss Director based in Mumbai.The
Swiss-Indian Chamber of Commerce, which has regional chapters in New Delhi, Mumbai
and Bangalore, has consolidated its position as a bilateral business chamber now
present in both the countries. It works closely with the Embassy and the Consulate
General to help strengthen and promote bilateral trade and investment relations and
frequently organizes networking events. The Swiss-Indian Business Forum in Geneva is
also active to bring closer Swiss and Indian business communities, and therefore
organized a business mission for SME to India in October 2009.

5.2 Interest for Switzerland as a location for tourism, education and other
services, potential for development
• Thanks to the Indian film industry (Bollywood), Switzerland is amongst the top
destinations for outbound Indian tourists. With Switzerland joining the Schengen Area,
there could be an increase in the number of Indian tourists coming to Switzerland.
• The number of students interested to study in and apply to Swiss Universities has
increased in the past few years, especially for the two Federal institutes. India has now
become a “priority country” in terms of scholarships granted to Indian students and is now
entitled to 20 scholarships by the Swiss Government. The hotel management schools in
Switzerland continue to enjoy enormous goodwill amongst the Indian students.
• A 'Swissnex' to promote scientific and research cooperation between India and
Switzerland is operational in India.
• In the framework of the Indo-Swiss Joint Research Programme (ISJRP), a total of sixty
two grants have been awarded, of which twenty two were for joint research projects, four
for institutional partnerships projects, and thirty six for student and faculty exchanges. A
significant decision last year was to include in the ISJRP a call for public-private
partnership projects involving the collaboration between academic and industrial
partners.
• The Swiss-Indian Chamber of Commerce and the Federal Office for Professional
Education and Technology have jointly developed a project to implement elements of the

9
 Swiss vocational training system in India. The VET project has started in the second half
of 2009 in Pune and Bangalore.

5.3 Interest for Switzerland as a location for investment, potential for

development
• Recent Indian outbound investment trends have indicated a definitive interest among
Indian companies in Switzerland as a preferred location to expand their overseas and
European businesses. Most recent examples are not only expansions through
acquisitions (i.e. Hindustan Construction Company’s acquisition of Switzerland based
Karl Steiner AG), but also establishments of Greenfield operations (i.e. Venkateshwara
Hatcheries/Venky’s establishment of a poultry vaccine facility in Switzerland).
• The perception of Switzerland as a preferred location for Indian companies to base their
European operations is gaining importance. Some of the key reasons for this are:
Switzerland’s advantage of having full access to the European market including
Schengen, without facing certain disadvantages of the European Union and the Euro
Zone (such as a strict regulatory environment and excessive bureaucracy); political and
economical stability; the transaction security that the country provides with a unique tax
ruling practice that offers a fair and attractive treatment to overseas investors; sector
clusters that enable companies to strengthen their research and development capabilities
by fostering partnership between the private sector and top class university institutions;
traditional reasons such as high quality of life, highly skilled labour force and flexible
labour laws, competitive business environment, sophisticated infrastructure with a high
degree of reliability, as well as easy access of government agencies.

5.4 Interest for Switzerland as a financial location, potential for development

• Indian companies engaged in external trade have been using the Swiss banking system
for business transactions. For wealthy Indian people, the Swiss banks are reliable and
trustworthy financial institutions. However, for a wider public, the image of Switzerland is
still that of a “tax haven” where, according to political rhetoric of some, “rich Indians stash
their black money away”. This has been a major topic in the election campaign of the
opposition party in 2009 but has been less in the media since then. End of 2009 and
beginning of 2010 Switzerland and India have concluded the negotiations for a revision
(on administrative assistance in tax matters in accordance with the OECD standard) of
the existing bilateral double taxation agreement.
• In the recent years, Swiss banks have shown great interest to do business in India and
would like to be much more active here. Both UBS and Credit Suisse recently obtained
the full banking licence. A high-level delegation of the Swiss Bankers Association is
scheduled to visit India later this year to interact with the government, financial regulatory
bodies, and Swiss and Indian bankers to facilitate increased cooperation in the
banking/financial sector between the two countries.

10
6 Useful internet links
• Government’s agencies
Department of Commerce: http://commerce.nic.in
Department of Industrial Policy and Promotion: http://dipp.nic.in/
Directorate General of Foreign Trade: http://dgftcom.nic.in/exim/2000/default.asp
Ministry of Finance: http://finmin.nic.in
Ministry of Statistics & Programme Implementation: http://mospi.gov.in/
Economic Survey 2009-10: http://indiabudget.nic.in/es2009-10/esmain.htm
Reserve Bank of India: http://www.rbi.org.in/
Planning Commission: http://planningcommission.gov.in
Directory of Government of India: http://goidirectory.nic.in/

• Press Agencies
Press Information Bureau: http://pib.nic.in

• Newspapers
The Economic Times: http://economictimes.indiatimes.com
Business Standard: http://www.business-standard.com

• Chambers of Commerce
Confederation of Indian Industry: http://www.cii.in
Federation of Indian Chamber of Commerce & Industry: http://www.ficci.com/
Associated Chambers of Commerce and Industry: http://www.assocham.org

• Swiss Trade and Investment Promotion Agency

Osec Business Network Switzerland (Swiss Business Hub India): http://www.osec.ch
India - Basic Addresses, Business Guide & Legal Provisions:
http://www.osec.ch/content/internet/osec/en/home/export/countries/in/export.html

• Indo-Swiss Joint Research Programme: http://indo-swiss.epfl.ch/

Annexes
1. Economic structure
2. Main economic data
3. Trade partners
4. Bilateral trade
5. Main investing countries
6. List of main Swiss enterprises in India

11
 ANNEX 1

Economic Structure

Share GDP (%) 2006-07 2009-10 Variation

Primary sector (agriculture) 17.1 14.6 -14.6
Manufacturing sector (industry) 28.7 28.2 -1.7
Services 54.2 57.2 5.5

Employment (estimated for 2004-05)

Total Population (million) 1092
Number of Total Labour Force (million) 419
% of Total Workers 38.4

Projected Employment and Unemployment

Particulars 2006-07 2011-12 2016-17
Labour Force (million) 438.948 483.659 524.057
6
Employed (million) 402.238 460.310 518.203
Unemployed (million) 36.710 23.349 5.854
Unemployment Rate (%) 8.3 4.8 1.12

Sector-wise Share of Employment (in percentage)

Sector 1999-2000 2004-05 2006-07
Agriculture 56.64 52.06 50.19
Mining and quarrying; manufacturing; electricity,
gas and water etc.; and construction 17.58 19.47 20.38
Services 25.78 28.47 29.43
Total 100 100 100

Source: Ministry of Finance, Government of India,

Planning Commission, Government of India

6
Nearly 90 percent of the employed labour force is engaged in the unorganised sector.

12
ANNEX 2

Main economic data

2008 2009 2010

GDP - current prices (US$ billion) 1,206.683 1,235.975 1,367.216
GDP per capita - current prices (US$) 1,020.831 1,030.785 1,124.411
GDP growth rate - constant prices (annual % change) 7.3 5.7 8.8
Inflation, average consumer prices (annual % change) 8.3 10.9 13.1
Current account balance (% of GDP) -2.2 -2.0 -2.1

Source : IMF, World Economic Outlook Database (April 2010)

http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/weoselgr.aspx

2007-08 2008-09 2009-10

(Prel.) (Proj.)
Central government deficit (% of GDP) -3.3 -8.0 -7.5
External debt (% of GDP) 19.2 19.9 19.3
Debt service ratio (in % of current account receipts,
5.3 5.2 5.3
excluding grants)
Gross Official Reserves - in months of imports 10.3 9.3 9.5

Source : IMF, Article IV Consultation with India (March 2010)

http://www.imf.org/external/pubs/ft/scr/2010/cr1073.pdf

13
ANNEX 3

Trade Partners (April – August 2009)

Rank Country India Exports to (US$ million) % Share Var.7 in

percentage
1 UAE 9182.1 14.4 -31.1
2 USA 7149.1 11.2 -27.8
3 China 3288.1 5.1 -25.7
4 Singapore 2880.9 4.5 -42.6
5 Hong Kong 2611.9 4.1 -13.4
6 UK 2403.3 3.7 -21.7
7 Netherlands 2216.3 3.5 -26.6
8 Germany 2012.5 3.1 -31.6
9 Saudi Arabia 1636.2 2.6 -45.4
10 Indonesia 1331.3 2.0 -0.5
EU 12980.6 20.4 -30.9
Switzerland 196.0 0.3 -46.5
Total 63617.7 100.00 -31.7

Rank Country India Imports from (US$ million) % Share Var.8 in

percentage
1 China 12443.3 11.9 -21.0
2 USA 6298.9 6.0 -25.5
3 UAE 6030.2 5.8 -56.0
4 Saudi Arabia 5916.7 5.7 -48.8
5 Australia 4539.2 4.3 -9.5
6 Iran 4517.1 4.4 -33.5
8 Germany 4028.6 3.9 -25.7
9 Indonesia 3225.3 3.1 23.3
10 South Korea 3054.5 2.9 -22.0
EU 14116.2 13.6 -30.0
7 Switzerland 4248.8 4.1 -38.7
Total 103787.9 100.00 -32.5

Source: Reserve Bank of India’s Monthly Bulletin - April 2010

7
Change over April – August 2008
8
Change over April – August 2008

14
ANNEX 4

Bilateral trade

Exporte Veränder. Importe Veränder. Saldo

Jahr
(CHF Mio.) z. Vorjahr (CHF Mio.) z. Vorjahr (CHF Mio.)
1995 659.6 23.5 % 337.0 1.8 % 322.6
2000 655.7 28.1 % 600.6 27.0 % 55.1
2001 655.7 0% 585.0 -2.6 % 70.7
2002 641.3 -2.2 % 516.1 -11.8 % 125.2
2003 741.6 15.7 % 500.2 -3.1 % 241.4
2004 1019.1 37.4 % 548.1 9.6 % 470.98
2005 1369.04 34.3 % 652.85 19.1 % 716.19
2006 1888.04 37.8 % 736.99 12.8 % 1151.05
2007 2303.83 22.1 % 949.48 29.0 % 1354.35
2008 2406.38 4.5 % 1101.22 16.0 % 1305.16
2009 2156.2 -10.4 % 800.6 -27.4 % 1355.6

Aussenhandel nach Produktegruppen

Exporte 2009 2008
(in % des Totals) (in % des Totals)
1. Maschinen (nicht elektrisch) 23.4 25.7
2. Pharmazeutische Erzeugnisse 18.0 15.5
3. Edelsteine, Edelmetalle, Bijouterie 15.7 19.2
4. Maschinen (elektrisch) 11.1 9.6
5. Opt. / medizin. Instrumente 7.2 6.5
6. Chemische Grundprodukte 6.6 7.9
7. Düngemittel, Farbstoffe, Pigmente 4.6 3.0
8. Uhrmacherwaren 3.5 3.5
9. Unedle Metalle und Waren daraus 2.6 2.8

Importe 2009 2008

(in % des Totals) (in % des Totals)
1.Chemische Grundprodukte 30.7 27.9
2.Textilien und Bekleidung 19.7 15.5
3. Landwirtschaftliche Produkte 9.1 7.0
4. Edelsteine, Edelmetalle, Bijouterie 8.3 19.9
5. Fahrzeuge, Flugzeuge, usw. 5.8 2.4
6. Düngemittel, Farbstoffe, Pigmente 3.6 4.6
7. Unedle Metalle und Waren daraus 3.3 4.6
8. Maschinen (nicht elektrisch) 3.1 3.6
9. Felle, Leder, Lederwaren 3.1 2.0

Source : Aussenhandelstatistik, Januar bis Dezember 2009

15
ANNEX 5

Main investing countries

Rank Country Actual Inflows of FDI (US$ million) % Share9

April 2000 - December 2009
1 Mauritius 45778 41.3
2 Singapore 9518 8.6
3 U.S.A. 7919 7.1
4 U.K. 5611 5.1
5 Netherlands 4359 4.0
6 Cyprus 3613 3.3
7 Japan 3611 3.3
8 Germany 2712 2.4
9 U.A.E 1507 1.4
10 France 1469 1.3
11 Switzerland 921 0.8
EU 20806 18.8
Total10 110761 100

Source: Department of Industrial Policy and Promotion, Ministry of Commerce and Industry

Year Net Portfolio Investment (US$ million)

2003-04 11377
2004-05 9315
2005-06 12492
2006-07 7003
2007-08 27433
2008-09 -13853
2009-10 23600
(April-December)

Source: Reserve Bank of India

9
The share is calculated on the basis of cumulative FDI inflows received in Indian Rupees.
10
Total figure includes inflows under NRI schemes of Reserve Bank of India, stock swapped, and advances pending issue of shares.

16
ANNEX 6

List of Swiss Companies in India

The following link to the website of the Embassy will provide you with a list of Swiss
companies operating, through joint venture or 100% subsidiary, in India as on April 2008.
http://www.eda.admin.ch/etc/medialib/downloads/edactr/ind.Par.0027.File.tmp/Swiss%20co
mpanies%20in%20India%202008.pdf

17