In recent years, India has emerged as a preferred investment destination for Swedish businesses, signaling a shift from traditional markets like China. Jan Thesleff, Sweden’s ambassador to India, highlighted this trend, noting the increasing interest among Swedish companies in broadening their presence in Asia, with India being one of their preferred choices. Thesleff’s remarks underscore the growing economic ties between the two countries and the significant potential for further collaboration in various sectors.
One of the key factors driving Swedish investment in India is the positive perception of the business climate in the country. According to the 2023 Global Business Climate Survey conducted by Business Sweden, a majority of Swedish companies perceive India’s business climate to be either good or very good, reflecting a significant increase compared to previous years. This favorable sentiment has encouraged Swedish businesses to explore investment opportunities in India across various sectors.
FDI inflows from Sweden to India have been noteworthy, totaling $2.38 billion between 2000 and 2023, according to Invest India, the government’s trade promotion agency. Sectors such as automobiles, industrial machinery, electrical equipment, and metallurgy have attracted significant investment from Swedish companies. Additionally, the defense sector has witnessed closer ties, with Swedish firm SAAB receiving clearance to establish a 100% FDI manufacturing unit for producing Carl Gustaf M4 rockets, further boosting investment prospects.
Despite the economic cooperation in innovation, clean energy, and defense, bilateral trade between India and Sweden has historically underperformed. However, efforts are underway to strengthen trade ties, with both countries exploring avenues for enhanced collaboration. The proposed India-EU free trade agreement is viewed as a significant opportunity to bolster economic relations between India and Sweden. Thesleff emphasized the importance of the FTA for both parties, highlighting India’s demographic dividend and its potential to transform its economy.
In addition to trade agreements, Sweden is leveraging its export credit agency SEK, along with other agencies like EKM and Swedfund, to support investments in India. These agencies provide financing, export credit guarantees, and expertise for large-scale projects, contributing to the growth of bilateral economic cooperation. Thesleff emphasized Sweden’s focus on promoting trade rather than aid, highlighting the role of these agencies in facilitating investments and fostering economic partnerships.
The presence of the Indian diaspora in Sweden has also contributed to closer ties between the two countries. With steady immigration over the years, the Indian community in Sweden has grown to approximately 60,000 individuals, representing a significant portion of Sweden’s population. Thesleff highlighted the increasing influence of the Indian diaspora in Sweden and its potential to further strengthen bilateral relations in the future.
Looking ahead, Thesleff expressed optimism about the future of India-Sweden relations, emphasizing the mutual benefits of deeper economic engagement. As India continues to undergo economic transformation and embraces global trade opportunities, Sweden sees potential for expanding cooperation across various sectors. The ongoing discussions around the India-EU free trade agreement present an opportunity to deepen economic ties and unlock new avenues for collaboration between the two countries.
India has emerged as a preferred investment destination for Swedish firms, driven by a positive business climate, growing FDI inflows, and efforts to strengthen economic cooperation. With both countries exploring avenues for closer collaboration, there is significant potential for further growth and partnership in the years to come.