Relationship between Italy and India is very important

India is the 4th market in the Asia-Pacific region for Italian export. As the Export Credit Agency (ECA) of Italy, SACE works alongside Italian exporters and Indian importers to support business between them. We foresee this partnership only becoming stronger over the next several years, says Gautam Bhansali, Head – India & South Asia, SACE. In this interview with Rakesh Rao, Gautam Bhansali elaborates on innovative financing solutions provided by SACE to facilitate exports from Italy to India.

As the Export Credit Agency (ECA) of Italy, how is SACE facilitating Italian companies who are operating in India or who are exploring business in India?
SACE can play an important role to increase trade relations between our two countries, and consequently assist with the economic recovery of our countries. Being Italy’s Export Credit Agency, in recent years, we have supported 26,000 companies in over 200 countries with transactions of EUR 156 billion. We provide institutional advisory to exporters and through a wide range of insurance linked financial solutions, we enable importers in countries across the world, including India, purchase Italian machinery and equipment.

With an exposure of approximately EUR 800 million in India, SACE, through its office in Mumbai, has supported not only Italian companies to export products into India but also enabled Indian importers to procure state-of-the-art Italian products through its innovate financing solutions. These financial solutions enable Indian importers to avail of medium (3-5 yrs) to long (>5 yrs) term finance for their imports from Italy and at the same time provide comfort to Italian companies that their export receivables are insured/guaranteed against non-payment risk. Furthermore, being locally present, SACE provides market insights to Italian companies while they evaluate options to enter India either on their own or through a partnership with an Indian company.

How do you see the potential of Indo-Italian trade relationship? What is the role of SACE in boosting Indo-Italian trade?
The relationship between Italy and India is very important. India is the 4th market in the Asia-Pacific region for Italian export. We foresee this partnership only becoming stronger over the next several years. As mentioned earlier, providing innovative financing solutions to facilitate exports from Italy to India remains the key role of SACE. For this reason, SACE works alongside Italian exporters and Indian importers, supporting business between them. It has a portfolio of operations and new projects currently under evaluation for either traditional export credit or Push Strategy support, across a wide range of industrial sectors (electrical and renewable energy, steel, packaging, petrochemical and oil & gas). The Push Strategy is an innovative program that we launched a few years ago, with the aim of facilitating the introduction of Italian companies to local buyers and strengthening business relations between them. Since 2018, SACE has finalised in India Push Strategy transactions for more than EUR 650 million in financing, among which Reliance Industries (Diversified Conglomerate) for an amount of $ 500 million and Shriram Transport Finance for an amount of EUR 125 million.

What are key challenges faced by Italian companies doing business in India (or planning to do business in India)?
India is certainly an emerging and a highly competitive market to focus on, and one that we follow with great interest. Italian companies are competing not only with other European companies but with companies from countries like China, Japan and Korea as well and not to forget local India manufacturers as well that are able to compete very well in terms of both quality and price.

SACE helps Italian companies to achieve this goal. For example, the Push Strategy – that I mentioned before – is a commitment that goes beyond the financial side of the transaction and does not end with the loan, but continues with concrete implications and developments. With it, SACE has been able to put in touch 110 Italian companies, mostly SMEs, with major Indian companies, arranging 7 business-matching events, wherein 75 B2Bs were held. Furthermore, SACE is open to evaluate innovative projects in India, also with start-ups and scale-ups, that would require high precision and advanced machinery and equipment Italian companies can provide and that will permit India to become a global hub for manufacturing, design, and innovation, as envisaged by the “Make in India” programme launched by the Government.

How has been the export performance of Italy to India? Which industries are driving the demand for Italian products and technologies in India?

Before Covid, Italy’s exports to India were on a promising path, increasing to approximately $ 4.5 billion per annum. The physiological slump in trade between our two countries in 2020 will probably be temporary, obviously subject to Covid-related upheavals. In the first 5 months of 2021, both our exports to and our purchases from India recorded a relevant increase, respectively by +35% and +26%, compared to the same period of the last year. Even more importantly, this positive trend is broad based across sectors. Some of the industries that are driving the demand are oil & gas, steel, automotive, packaging, infrastructure and related equipment and, last but not the least, the 3Fs, i.e. Food, Fashion and Furniture in the retail segment.

Are you seeing a rise in the number of Italian companies exploring business opportunities in India in recent years?
Covid notwithstanding, India is seen as a very important market and with new and favourable policies being announced by the Government of India, we see a keen interest from Italian companies to not only export but also to collaborate with local companies and eventually set up operations in India.

How important is sustainability for SACE? How is it promoting sustainability among Italian exporters?
SACE is working to make sustainability as one of the most important drivers for Italian companies. For this economic transition in particular, the Simplification Decree has assigned SACE with a leading role in the Italian Green New Deals. This programme issues green public guarantees under Italy’s ecological transition plan.

Sustainability has become even more relevant given its crucial role in Italy’s Recovery and Resilience Plan. Green guarantees, guaranteed by the Italian State, aim to finance projects that facilitate the transition to an economy with a lower environmental impact by using low-emission technologies in production cycles to manufacture sustainable goods and services, and by promoting new mobility solutions with lower emissions. In particular, projects must generate a significant benefit in favour of at least one of the following environmental objectives: climate change mitigation and adaptation; sustainable use and protection of water and marine resources; transition towards a circular economy; prevention and reduction of pollution; and protection and restoration of biodiversity and ecosystems.

Italian machinery companies have been technology partners for the Indian textiles industry for many years. How do you see the potential of Indian textile sector for the growth Italian companies in the future?
The potential is great! As more and more textile companies manufacture products to compete in the global market, the demand for sophisticated machinery and technology has only grown and Italy has always been at the forefront of innovative products and innovative technology in the textile sector, enabling the further growth of the textile companies in India.

Are there any special initiatives/schemes of SACE for Italian textile machinery companies?
SACE has various financial products/schemes that enable Italian textile machinery companies present both in Italy and in India to grow their business. For companies that manufacture and export from Italy, we have our traditional Export Credit (Buyer / Supplier Credit) products and for Italian companies operating in India, we have our ‘Internationalisation’ product that enable them to establish and operate in India. Through our innovative ‘Untied/Push Strategy’ product, we enable Italian companies both in Italy and India get access to some of the largest corporate groups in India, to highlight their products to and also facilitate business with them.

Italy is one of India’s most trusted trade partners. How do you see the future of India-Italy trade relation in a volatile global environment?
I can safely mention that this is just the beginning of a long and fruitful journey and the India-Italy trade relations will only get stronger.