India – Spain Bilateral Relationship (GS Paper 2, IR)
Why in the News?
- Spanish Prime Minister Pedro Sanchez is visiting India from October 28 to 30, 2024.
- This visit marks a significant milestone, being the first by a Spanish Prime Minister in 18 years.
- During his stay, he will engage in bilateral discussions with Indian Prime Minister Narendra Modi in Vadodara, Gujarat, where they will inaugurate the Final Assembly Line (FAL) plant for the C295 medium-lift tactical transport aircraft.
- This initiative represents a crucial step in enhancing India’s defense capabilities and furthering cooperation with Spain.
Historical Ties
- India and Spain established formal diplomatic relations in 1956, although their interactions predate this.
- The relationship has evolved over time, grounded in shared democratic values, a commitment to global peace, and mutual respect for multiculturalism.
- High-level exchanges, including visits by heads of state, have strengthened these ties and fostered a desire for deeper collaboration.
Bilateral Trade
Spain is India’s sixth-largest trade partner in the European Union.
- Total Trade (2023): Approximately $8.25 billion, a 4.2% increase from the previous year.
- India’s Exports to Spain: $6.33 billion, reflecting a growth of 5.2%.
- India’s Imports from Spain: $1.92 billion, with a growth rate of 1.05%.
Key Exports from India:
India’s exports to Spain encompass a wide range of goods, including:
- Mineral Fuels
- Chemical Products
- Iron and Steel
- Electrical Machinery
- Apparel
- Nuclear Reactors
- Marine Products
Foreign Direct Investment (FDI):
- Spanish FDI in India: Totaling about $3.94 billion (April 2000 - December 2023), making Spain the 16th largest investor in India. Over 280 Spanish companies operate across sectors such as metallurgical industries, renewable energy, automotive, ceramics, and infrastructure.
- Major Investment Destinations: Key states for Spanish investments include Maharashtra, Tamil Nadu, Gujarat, Andhra Pradesh, and Karnataka.
- Indian FDI in Spain: Approximately $900 million, with around 80 Indian companies established in Spain, primarily in software, pharmaceuticals, chemicals, and logistics.
Trade and Economic Cooperation Framework:
- The India-Spain Joint Commission on Economic Cooperation (JCEC), established in 1972, has held 12 meetings, with the most recent in April 2023 in New Delhi.
- The India-Spain CEOs Forum, launched in 2015, aims to enhance business collaboration and held its first formal meeting in May 2017 in Madrid.
Strategic Significance and Cooperation
The strategic partnership between India and Spain is broadening, particularly in defense, counter-terrorism, and cybersecurity.
Defense Cooperation:
- Spain is a key partner in India’s defense modernization, providing expertise in aerospace and naval technology.
- Spanish companies are involved in several defense projects, including technology transfer for submarines and collaborations on military aircraft development.
- The C295 aircraft assembly plant in India signifies a major advancement in indigenous defense manufacturing capabilities.
Counter-Terrorism:
- Both nations actively cooperate on counter-terrorism, sharing intelligence and recognizing mutual security concerns related to global terrorism.
Sustainable Development and Climate Action:
- Both countries are committed to the Paris Agreement and collaborate on initiatives addressing climate change.
- Spain’s expertise in renewable energy aligns with India’s objectives to expand its clean energy sources and achieve sustainable development goals.
Common Groupings and Multilateral Cooperation
India and Spain engage collaboratively through various multilateral platforms:
- United Nations: Joint efforts in addressing issues of global peace, sustainable development, and humanitarian aid.
- G20: Shared commitment to tackling pressing global economic challenges and promoting trade reforms.
- International Solar Alliance (ISA): Spain’s membership supports India’s initiatives in promoting solar energy.
Indian Diaspora in Spain
- The Indian community in Spain is growing, with approximately 55,000 Indians residing there as of 2023.
- This diaspora contributes significantly to sectors such as hospitality, retail, IT, and healthcare, playing a vital role in enhancing cultural ties and economic interactions between the two countries.
Way Forward
- Prime Minister Sanchez’s visit to India is expected to yield significant outcomes, including the inauguration of the FAL plant for the C295 tactical transport aircraft.
- Under a $2.5 billion contract, India will receive 56 C295 aircraft, with the first 16 delivered from Spain and the remaining 40 assembled in Vadodara.
- The plant aims to produce its first "Made-in-India" C295 by 2026, with all deliveries expected by 2031.
- Additionally, Sanchez will visit Mumbai to engage with industry leaders and film personalities, aiming to strengthen collaborations in trade, media, and entertainment.
- Several Memoranda of Understanding (MoUs) are anticipated to be signed, furthering cooperation in trade, IT, infrastructure, renewable energy, defense, pharmaceuticals, and tourism.
Conclusion
- The bilateral relationship between India and Spain is poised for significant growth, driven by mutual interests in trade, defense, and sustainable development.
- The recent visit by Prime Minister Sanchez underscores the commitment of both nations to deepen their ties and enhance cooperation across diverse sectors.
- As India continues to strengthen its defense capabilities and expand its economic footprint, the partnership with Spain will play a vital role in achieving shared goals of security, prosperity, and sustainable development in an increasingly interconnected world.
