Economic Scenario of Italy and India
Italy has a diversified economy, divided into a developed industrial north, dominated by private companies, and a less developed agricultural south, with persistent high unemployment. The Italian economy is driven in large part by the manufacture of high-quality consumer goods produced by small and medium-sized enterprises, many of them family owned. Italy is the third-largest economy in the euro-zone, but exceptionally high public debt burdens and structural impediments to growth have rendered it vulnerable to scrutiny by financial markets.
Italy’s economy ranks consistently among top ten in the world, is fully diversified, but dominated by small and medium-sized firms (SMEs), which comprise 99.9 % of Italian businesses. Italy’s relatively affluent domestic market, proximity to emerging economies in North Africa and Middle East, and assorted centers of excellence in scientific and IT research remain attractive to investors. The government remains open to foreign investments in shares of Italian companies and continues to make information available online to prospective investors. The Italian government’s is implementing new investment promotion policies to position Italy as a desirable investment destination exudes their willingness for FDI inflow.
India-Italy economic relations
Italy is India's fifth largest trading partner in the EU. Italy is the 13th largest foreign investor in India (0.70% of the cumulative total FDIs to India in the period April 2000 – June 2017). The India-Italy trade stood at $10.5 billion in 2017-18, up from $8.8 billion in the previous fiscal.
The thrust areas of India's exports to Italy are iron and steel and ferro-alloys; organic basic chemicals, refined petroleum products; plants; footwear; tanned leather, vehicles; fish, jewellery and related items; plastics in primary forms; dyes and pigments; parts and accessories for vehicles. Principal items of India's imports from Italy: machinery for textile and leather industries; general and special purpose machinery; organic basic products; parts for vehicles; taps and valves; Machine tools for metal shaping; Ornamental and building stone, limestone, gypsum, chalk and slate; Tubes, pipes, hollow profiles and related accessories in steel ; pumps and compressors; chemical products.
India’s total engineering exports to Italy stood at 2460.16 million USD for the F.Y. 2017-18 which is approx. 43% of the India’s total exports to Italy i.e. 5709.85 million USD. The above figures exude the dominance of engineering exports in the total exports from India to Italy.
The top 6 panels among the gamut of engineering export panels are Iron and Steel, Motor Vehicle/cars, Aluminum and products, Articles of Iron/Steel, Auto Components/Parts and Industrial Machinery in order of mention. Iron and Steel taking the lead with a contribution of 42% is remarkable in this Italian economic scenario. The absolute figure of 1029.92 million USD of Iron and Steel’s exports constitute approx. 18% to the India’s total exports to Italy i.e. 5709.85 million USD. Iron and Steel, Motor Vehicle/cars and Industrial Machinery contributes more than 60% to the total pie of the India’s total engineering exports to Italy for the F.Y. 2017-18.
Sectors to watch out with potential for Indian exporters are as follows:
1. Automobile sector: Italy is the fourth largest European automotive market after Germany, the UK and France, with 1.82 million new passenger vehicles sold in 2016. Advanced/High technology enabled machinery in automobile component manufacturing is a considerable opportunity like advanced Injection molding techniques for high precision, robot based applications etc. The increasing importance of the Italian market concerning alternative fuels vehicles (namely LPG and CNG models) offers interesting opportunities for the Suppliers of diagnostic equipment needed to maintain gasoline engines converted to dual fuel (gasoline + LPG and gasoline plus CNG), Suppliers of refueling stations, including components and suppliers of electric two-wheelers.
2. Airport and Ground Support Equipment: Italian airports handle almost 150+ million passengers huge air cargo volumes transiting through Italian airports. Experts estimate Air traffic to nearly double by 2030 and airport expansion, purchase of new equipment and systems in tandem. Opportunities exist such as anti-intrusion systems, automated baggage handling systems (BHS), approach surveillance radars, sea rescue equipment, precision approach path indicators and radars, digital x-ray systems, fire detection and extinguishing equipment. Other technologies with strong prospects include primary explosive detection systems (PEDT) and EDS for cargo luggage, and multi-level systems with threat image projection software for mail and parcels.
3. Medical Devices and Technology: Italy’s high per capita income and sophisticated healthcare system translate into demand for a broad range of cutting-edge medical equipment. The Italian government is the primary purchaser of medical equipment with Public hospitals account for over 75% of medical device sales. Despite having a considerable local manufacturing industry, the domestic market for medical equipment is highly dependent on imports. The budgetary pressures and escalating costs of healthcare systems raises demand for cost-effective ways and innovative products. The best sales potential for medical equipment is in the home care equipment, remote monitoring equipment, high frequency medical lasers, diagnostic imaging equipment, non-invasive and micro-surgery devices, anesthesiology equipment, EKG, stimulators and defibrillators, ophthalmic equipment and monitoring equipment.
4. Renewable Energy: Italy remains one of the most important international markets for renewable technologies. Hydroelectric plants and solar plants make up about a third each of total renewable plants present in Italy, while the remainder consists of wind, biomass and geothermal plants. Wind Power technologies present the strongest growth opportunities in the near future. Most Italian wind developers will likely source turbines, towers, and other large equipment.
5. Safety and Security Equipment: The Italian safety and security and building automation market expect the growth trend to continue in the near term. Equipment with the greatest sales potential includes advanced video surveillance monitoring solutions, Security solutions for local and regional rail and high-speed rail, including related infrastructure, Supply chain security, traceability, Platform/sensor land border detection systems, Airport passenger and baggage screening equipment, Cargo/container scanning equipment and automated home protection solutions. Opportunities exist in the aviation, maritime, supply chain and rail security areas as a result of security measures mandated by regulatory bodies.
6. Green Materials for Sustainable Building Solution: Growth ofGlobal green building market increasing demand for green materials, products and technologies. The forecast for sustainable building sector is to grow by 70% by 2025. Italy is spokesman throughout the world for the values associated with the design and production of Italian-made goods and architecture, has strong competencies in a variety of green building materials, products and Systems, such as Perilite core bricks, eco-friendly flooring solutions, natural material, building systems, also with use of recycled materials.