John Whelan: India could be the next big market for Ireland

Irish exporters have failed to crack the Indian market in any substantial way, and will hope that a free trade deal will make the difference and enable the kind of growth they have managed in the likes of China.

Sun, 11 Jun, 2023 - 17:49

John Whelan

A seismic technology shift is upon us as the world moves aggressively towards electric vehicles, sparking the energy storage revolution, a revolution currently led by China. But this may be about to change, as India recently indicated it may overtake China following a substantial discovery of lithium reserves.

Up until now, lithium reserves have been an important factor in Apple’s location of manufacturing in China and for Tesla’s, which has signed off a three-year lithium supply deal with top Chinese lithium producer Ganfeng Lithium.

The lithium find is game changer for India and its trading partners, not only in the manufacture of batteries for electric cars, but also mobile phones, laptops, and other electronic devices manufacturing.

In a coordinated move with India’s government, based on the find of lithium reserves, Tata Group signed an outline deal to invest $1.6bn (€1.5bn) to build a lithium cell factory, as part of the nation’s efforts to create its own electric vehicle supply chain and reduce its reliance on Chinese imports. But also having a domestic source of lithium could potentially be a big carrot to attract foreign investment and other clean energy technologies.

This all adds up to dramatically improve India’s standing on climate targets enabling achievement of its goals of 30% electric vehicles, 70% commercials, and 80% two wheelers by 2030. In the fraught geo-political tension over the war in Ukraine, it also gives India the potential to reduce its dependence on imports of fossil fuels from Russia.

Russian crude imports into India and then sold onto the world markets has become a major thorn in the side of EU negotiators and scuppered the latest round of an EU-India free trade deal which was making good progress towards completion.

The 11th round of EU sanctions on Russia over its war on Ukraine, is now in the pipeline, which may exclude India and focus mainly on China as the EU tries to punish countries that enable sanction evasion on a range of products but mainly for importing Russian crude oil, part processing and re-exporting to others internationally.

While this has stalled the EU-India free trade deal, once the sanctions round is agreed by member states, both India and the EU, will be anxious to get back to finalising a free trade deal.

Irish exporters have failed to crack the Indian market in any substantial way, and will hope a free trade deal will make the difference and enable the kind of growth they have managed in the likes of China. Exporters repeated criticism is that the potential has not been achieved because of the high duties on imports into India.

One important example is the huge consumer demand for whisky in India which is protected by a 150% tariff on imports, hitting Irish whiskey and making it prohibitively expensive for locals to buy.

Many more Irish whiskey companies would gain access to the Indian market to sell their products if the tariff reduced. Without high tariffs, India could become the second largest market worldwide for Irish whiskey, second only to the US, based on the population size and consumer demand.

There are many potential synergies for both countries to gain from, not least of which is the attractive base Ireland offers Indian companies to access the EU markets post-Brexit.

However, the assets of Irish and other European companies frozen by the government of India’s decision to introduce a unilateral termination of almost all existing old investment protection treaties, will have to be reversed, if progress on a free trade deal with the EU is to be concluded.