The French President comes visiting - Atasi Das

French President Nicolas Sarkozy has sealed business deals worth around Euro 13.3 billion in nuclear power (including five civil nuclear power agreements), civil aviation and defence alone, during his December state visit to India.

Major deals
Of the seven agreements reached between India and France during the Sarkozy visit, the “general framework agreement” signed between France based Areva and Nuclear Power Corporation of India, for the construction of two civil nuclear plants at Jaitapur in Maharashtra, at a cost of Euro 7 billion, was the show-clincher; four other nuclear plants are also in the pipeline. The six Indo-France “European Pressurized Water Reactors” will generate 10,000 megawatts of energy; the reactors will start power production by 2018. An Areva statement clarifies that, the deal also provides for the supply of reactor fuel for 25 years.

The Government of India will have to make a capital investment of $ 9.3 billion for the Jaitapur plant; while, the short term prospects of the deal seem good in terms of local employment and enhanced power generation, the government ought to guard against a high per unit cost of power in the long run. Analysts are sceptical about the use of new untested technology in the plant. The plant has drawn protests on environmental grounds. S.S. Bajaj, chairman Atomic Energy Regulatory Board of India (AERB) and Andre Claude Lacoste, chairman Nuclear Safety Authority (ASN) of France have signed an agreement for technical information exchange and cooperation in nuclear safety and radiation protection regulations.
The Indo-France joint agreements reached towards joint missile development and refitting of the Indian Mirage fighter jets are worth Euro 2-billion and Euro 1.5 billion respectively. The Mirage-2000 planes are French-origin fighter jets in the Indian Air Force combat fleet; critiques have raised questions about the exorbitant cost of the upgradation of these machines.

European business group, Airbus Industries has bagged Euro 2.8 billion deal for leasing A330 aircrafts to Jet Airways and state-run carrier Air India. Agreements have also been signed in the arena of film co-production and climate and earth system science.  France is collaborating with ISRO for building the satellites Megha-Tropiques and Saral, which will be launched in 2011; French Space Agency CNES and ISRO will also launch new research programmes.
The French Minister for Economy & Finance, Christine Lagarde has promised over Euro 10 billion of French investments in India, once our insurance and multi-brand retail sectors are sufficiently opened up for foreign investment. The Indian government is likely to go in for a calibrated approach towards FDI inflow regulations in insurance and multi-brand retail.
French companies are likely to pump in $ 12 billion of investments into India by 2012; French tyre manufacturer Michelin is set to invest Euro 600 million in a Tamil Nadu factory.

France based firm Dassault’s Rafale is in the fray for securing a $ 10.6-billion contract for supplying 126 fighter jets to India.
France also wants to augment its association with Indian universities in particular, the Indian Institute of Technology, Rajasthan located in Jodhpur.

Analysis
India is set to clock around 9 percent economic growth in the current year, a figure surpassed only by China. A young urbanising population numbering 1.2 billion is powering India’s booming market demand. Wary of the Chinese competition India is fast trying to boost its power generation capacity and defence, providing a lucrative market to foreign investors in the same. Analysts say Indo-France trade will be mutually beneficial as both countries stand to gain from their mutual expertise in fields like pharmaceuticals and engineering skills respectively.

The volatility of the US dollar in the recent times has prompted Nicolas Sarkozy to question the dominance of the USD in international trade. Interestingly, the Euro (France is a part of the Eurozone) has been in troubled waters in recent times due to events like the sovereign debt crisis. Sarkozy has advocated currency regulation and has also observed that speculation in commodity prices is adversely affecting the poorer countries.
In the arena of international politics, France has seldom been overtly critical about India’s nuclear ambitions and policies and has toed a pragmatic approach in bilateral relations. The Indo-French strategic partnership is in its 12th year now.

India’s recently passed nuclear liability legislation, which insists that the responsibility of any nuclear disaster ought to be shared by the operator as well as the supplier of the nuclear fuel and equipment (much to the chagrin of the western world and Russia) is likely to prevail with some necessary provisions for easing Indo-France trade in nuclear energy. France’s one-upmanship in nuclear trade with India is expected to set the ball rolling for other developed countries to follow suit. The Chinese Premier Wen Jiabao and the Russian President Dmitry Medvedev are expected in India in December for trade talks. Sarkozy has supported India’s bid for permanent membership in the expanded United Nations Security Council.
France has also praised India’s contribution in the development of war ravaged Afghanistan. Sarkozy has called for both the developed and emerging nations to initiate tailor-made strategies for containment of greenhouse gas emissions.

Conclusion
In the new economic order, India has sealed its position as the leading growth engine of Asia, second only to China. A high growth trajectory, a substantially liberalised regulatory regime and a burgeoning market has made India the favourable business destination of ‘developed’ countries, keen to resuscitate their tottering economies in the aftermath of the global financial meltdown. India needs to ensure that international trade is mutually beneficial to her and it helps her to efficiently develop her domestic resources.