VZCZCXRO2491
OO RUEHBI RUEHCI RUEHFL RUEHNP
DE RUEHRO #0565/01 0811347
ZNR UUUUU ZZH
O 221347Z MAR 07
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7464
RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
INFO RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0769
RUEHCG/AMCONSUL CHENNAI PRIORITY 0028
RUEHFL/AMCONSUL FLORENCE PRIORITY 2257
RUEHCI/AMCONSUL KOLKATA PRIORITY 0003
RUEHMIL/AMCONSUL MILAN PRIORITY 8482
RUEHBI/AMCONSUL MUMBAI PRIORITY 0034
RUEHNP/AMCONSUL NAPLES PRIORITY 2404
RUEHBS/USEU BRUSSELS PRIORITY 4494

UNCLAS SECTION 01 OF 02 ROME 000565 
 
SIPDIS 
 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD PREL IN IT
SUBJECT: ITALY-INDIA BILATERAL TRADE 
 
REF: A. 06 ROME 3350 
     ¶B. KOLKATA 54 
 
SUMMARY & COMMENT 
------------------ 
 
¶1.  (SBU)  Italian exports to India increased by 115 percent 
from 2000 to 2006, while imports from India into Italy rose 
85 percent in the same time period.  The majority of import 
activity from India is concentrated in the textile sector, 
while Italy primarily exports heavy equipment and machine 
parts to India.  A large Italian trade delegation visited 
India in February, led by Prime Minister Prodi, with hopes of 
further boosting trade relations.  Italian firms see 
opportunities in winning contracts to develop India's 
infrastructure.  While large Italian and Indian firms will 
find many opportunities to form partnerships and invest in 
both countries, Italian and Indian SMEs, which lack the 
organizational and management capacity for overseas 
investing, will likely find few opportunities in the near 
term.  End summary and comment. 
 
¶2.  (U)  According to February 2007 data from ISTAT, the 
Italian Statistical Agency, Italian exports to India 
increased by 115 percent from 2000 to 2006, from 1 billion 
euro to 2.2 billion euro.  Imports from India into Italy have 
increased 85 percent in the same time period, from 1.6 
billion euro to 2.9 billion euro.  The majority of import 
activity from India is concentrated in the textile sector. 
The majority of Italy's exports to India is in heavy 
equipment and machine parts, followed by electrical 
appliances. 
 
¶3.  (U)  Italy has registered a consistent balance of trade 
deficit with India since 2000. 
 
Italy's Foreign Trade with India, billions of euros (Source: 
ISTAT): 
 
      Exports   Imports  Balance 
2000   1.007     1.626    -.619 
2001   1.034     1.668    -.634 
2002   1.034     1.587    -.553 
2003   1.097     1.682    -.585 
2004   1.273     2.027    -.754 
2005   1.679     2.201    -.522 
2006   2.170     2.984    -.814 
 
 
ITALIAN TRADE DELEGATION'S VISIT TO INDIA 
----------------------------------------- 
 
¶4.  (U)  PM Prodi's trip to India in February -- the largest 
ever Italian trade delegation to visit --  included over 300 
business representatives.  (Note:  Prodi's trip followed an 
Indian trade delegation visit to Italy November 2006, led by 
the Indian Minister of Commerce and Industry, Kamal Nath (ref 
A).)  The Italian mission visited Chennai, Bangalore, Mumbai, 
New Dehli, and Kolkata (ref B).  The delegation consisted 
mostly of small- and medium-sized firms (SMEs), which make up 
90 percent of Italy's economy.  The mission resulted in 
eleven industrial agreements involving major Italian firms, 
such as Fiat, ENI, and Piaggio.  An example of the type of 
MOUs signed as a result of Prodi's visit is that of SELEX 
Sistemi Integrati, a Finmeccanica company, and Bharat Heavy 
Electricals Ltd. (BHEL), India's largest engineering and 
energy infrastructure group.  The SELEX-BHEL MOU seeks to 
develop closer ties between the two companies in the field of 
radar technology and explore a possible industrial 
partnership. 
 
 
ITALIAN INTERESTS IN INDIA 
-------------------------- 
 
¶5.  (SBU)  Econoff met March 12 with Amedeo Teti, Director 
General for International Agreements at the Ministry of 
Trade, to discuss the Italian trade delegation's February 
visit to India.  Teti stated that Italian companies were 
interested in bidding on contracts associated with India's 
seven-year, 300 billion euro infrastructure development plan. 
 (This plan reportedly includes high-speed rail and road 
links among New Delhi, Mumbai, Chennai, and Kolkata.)  Teti 
 
ROME 00000565  002 OF 002 
 
 
remarked that Italian companies do not want to "miss the 
boat" and arrive late on the scene, as they did in China.  He 
added that India is "a bet on the future" and offers a better 
business environment than China. 
 
¶6.  (SBU)  Teti also highlighted Indian interest in investing 
in the Italian textiles and jewelry sectors.  In the longer 
term, he stated, there may be interest in establishing 
relationships between Cine Citta film studios in Rome and the 
"Bollywood" movie companies.  Teti noted that Bollywood 
producers currently travel to Switzerland to shoot the alpine 
segments of their films, and that these scenes could be 
filmed in the Dolomites. 
 
¶7.  (SBU)  Teti thanked the U.S. for joining Italy in its WTO 
action against Indian tariffs on wine and spirit imports. 
Teti commented that the tariffs serve primarily to protect 
Indian whiskey makers. 
 
INDIAN INTERESTS IN ITALY 
------------------------- 
 
¶8.  (SBU)  Econoffs met March 21 with M. Subbarayudu, 
Commercial Counselor at the Indian Embassy in Rome. 
Subbarayudu stated that Indian investors and companies are 
just now beginning to study the Italian economy to see what 
opportunities might exist.  The ultimate decision on whether 
or not to invest in Italy would be made by Indian investors 
and companies themselves, Subbarayudu stated; the Indian 
government would merely ensure investors/firms had good 
contacts in Italy on which to base their investment 
decisions.  Subbarayudu noted that it would be difficult for 
Indian SMEs to break into the Italian market, given Indian 
SME's lack of organizational and managerial capacity, but 
that immediate opportunities exist for large Indian firms, 
such as Tata and BHEL. 
 
COMMENT 
------- 
 
¶9.  (SBU)  Italian firms see enormous opportunity in 
developing India's infrastructure and exporting Italian 
consumer goods to a growing Indian middle class.  As seen 
from here, Indian firms reportedly also see a viable economic 
partner in Italian firms to assist Indian firms develop new 
products and technologies.  However, the opportunities for 
Italian and Indian SMEs do not look so promising in the near 
future, given SME's lack of organizational and managerial 
capacity.  We note that of the eleven MOUs signed as a result 
of PM Prodi's trip, all involve large, industrial firms, such 
as Finmeccanica and BHEL.  SMEs in both countries will 
continue to struggle to enter the other's market in the near 
term.  End comment. 
SPOGLI