Economic Scenario of Italy
Italy is the third largest economy of the European Union (EU) with a GDP of USD 1.89 trillion as on 2020. However, GDP has declined in 2020 over the previous year following the disruption in economic activities led by the Pandemic. It is a diversified industrial economy with a highly industrialized and private sector dominated northern region and a relatively agrarian and subsidized southern region. The economy of Italy is driven in large part by the manufacture of high-quality consumer goods produced by small and medium-sized enterprises. Economic activities are largely dominated by services sector with a share of 73.9 percent to GDP while industrial activities contribute 23.9 percent to GDP leaving only 2.1 percent for the firm sector. Major industries in Italy include tourism, iron and steel, chemicals, machinery, food processing, textiles, motor vehicles, clothing, footwear and ceramics among others.
India-Italy economic relations
India and Italy enjoy a cordial relationship since centuries that has turned official since the former got its independence. This ever strengthening relationship took a new shape in November 2020 when a total of 15 MoUs covering areas like energy, media, finance, ship building were signed between these two nations during a virtual summit. During the 21stSession of the India-Italy Joint Commission for Economic Cooperation held through the virtual mode on 9 July, 2021, various issues like Promotion of Small and Medium Enterprises, Infrastructure with focus on High Speed Railways, Review on Cooperation under the India-Italy Fast Track Mechanism and Cooperation in promotion of start-up industries etc. were discussed.
Bilateral trade and investment
Italy is one of the largest export destinations for Indian products in Europe. Merchandise trade rose to USD 10.5 billion in 2018 but then dropped in the subsequent years following the economic slowdown in Italy and the COVID-led pandemic. Engineering exports also dropped following the merchandise export after reaching USD 5.8 billion in 2018. Exports of HVAC-R and Hardware products recorded at USD 131 million in 2020. Major engineering products exported to Italy from India include iron and steel and its articles, Aluminium and its products, Auto components, Industrial machinery and electric machinery among others.
Opportunity for Indian Engineering Industry
Italy’s major industries include a number of engineering products like Iron and steel, machinery, motor vehicles etc. while India is also a supplier of these goods in Italy. Despite of a strengthening bilateral trade, share of India in Italy’s global engineering import is slightly over 1%. This necessarily shows the opportunity left for Indian engineering industry to flourish in Italy. Moreover, a number of large and top line Indian firms from the engineering sector has already in operation in Italy. The names include Engineers India Limited, L&T, Mahindra & Mahindra among others. Economic development frameworks of both the nations have kept development of MSMEs and promotion of Start Ups as topmost priorities where there is immense scope for mutual cooperation. The prospect for Indian engineering manufacturers and exporters as well as aspiring businesses for initiating or strengthening businesses in Italy therefore is quite substantial.
