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INDIA-SPAIN BILATERAL RELATIONS
ECONOMY
Spain's mixed capitalist economy is
the 15th largest in the world.
However, after almost 15 years of
above average GDP growth, the
Spanish economy began to slow in
late 2007 and entered into a recession
in the second quarter of 2008. GDP
contracted by 3.7% in 2009, ending a
16-year growth trend, and by another
0.3% in 2010; GDP expanded 0.4% in
2011, before contracting 1.4% in
2012.
Key Economic Figures
2010(est.)
GDP(PPP)
$1.423 trillion
GDP–official
$1.41 trillion
exchange rate
GDP-real growth -0.3%
rate
Unemployment
20.1%
Rate
Public Debt
60.1%
Inflation Rate
2%
(consumer prices)
Exports
$253 billion
Imports
$ 315.3 billion
Source: CIA World Factbook
2011(est.)
$1.429 trillion
$1.494 trillion
2012(est.)
$1.409 trillion
$1.347 trillion
0.4%
-1.4%
21.7%
26%
68.5%
3.1%
85.3%
2.4%
$309.6 billion
$364.9 billion
$303.8 billion
$322.7 billion
The ongoing stabilization of international financial markets, though taking root in numerous segments,
was interrupted from February 2010 as a result of the fiscal crisis in Greece. Initially, the focal point
was the sovereign debt markets, but it subsequently spread to stock and foreign exchange markets.
This gave rise to various episodes of instability in Spain, which were particularly severe in the second
half of April 2010; in the four months to end-April, the IBEX registered a loss of 12.1%, a more
unfavorable performance than that of the Eurostoxx 50 index of the euro area stock markets (which
had fallen by 5% as at the same date).
On 28th April 2010 Fitch Ratings downgraded Spain’s long-term rating from AA+ to AA, though to a
much lesser extent than was the case for sovereign debt issued by Greece and Portugal . The
unemployment rate rose again in 2010, owing to the slowdown in the rate of decline of the labour
force.
Things turned positive in 2011, making Spain the last major economy to emerge from the global
recession. The reversal in Spain's economic growth reflected a significant decline in construction amid
an oversupply of housing and falling consumer spending, while exports actually begun to grow.
The economy has once again fallen into recession as deleveraging in the private sector, fiscal
consolidation, and continued high unemployment weigh on domestic demand and investment, even as
exports have shown signs of resiliency. Government efforts to boost the economy through stimulus
spending, extended unemployment benefits, and loan guarantees did not prevent a sharp rise in the
unemployment rate, which rose from a low of about 8% in 2007 to 26.0% in 2012.
STATUS REPORT- SPAIN
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The economic downturn has also hurt Spain's public finances. The government budget deficit peaked
at 11.2% of GDP in 2010 and the process to reduce this imbalance has been slow despite the central
government's efforts to raise new tax revenue and cut spending. Spain reduced its budget deficit to
9.4% of GDP in 2011, and roughly 7.4% of GDP in 2012, above the 6.3% target negotiated between
Spain and the EU.
Although Spain's large budget deficit and poor economic growth prospects remain a source of concern
for foreign investors, the government's ongoing efforts to cut spending and introduce flexibility into
the labor markets are intended to assuage these concerns.
The government is also taking steps to shore up the banking system, namely by using up to USD 130
billion in EU funds to recapitalize struggling banks exposed to the collapsed domestic construction and
real estate sectors. The government oversaw a restructuring of the savings bank sector in 2010, and
provided some USD 15 billion in capital to various institutions.
Investors remain concerned that Madrid may need to bail out more troubled banks. The Bank of Spain,
however, is seeking to boost confidence in the financial sector by pressuring banks to come clean
about their losses and consolidate into stronger groups.
Current State of Economy *
USD Billion
The Spanish recession deepened at the end of
2012, but the pace of contraction in the
GDP(PPP)
Forecast
economy is expected to ease in the coming
2000
quarters, as signaled by a recent improvement
1500
in leading indicators. The GDP is expected to
1000
contract by 1.6% in 2013. Recessionary
500
conditions are expected to persist throughout
this year as fiscal austerity continues to
0
dampen domestic demand, and the economy
restructures away from production of nontradable goods toward a greater focus on foreign demand. The growth in economic activity is expected
to finally resume from 2014.
Investment expenditure is forecast to remain very weak this year, as continued recession undermines
corporate profitability. The investments are expected to fall by 6.5% in 2013 and then by a further 0.2%
in 2014. But, as the pressure on the economy from fiscal tightening begins to ease, this should
promote an increase of about 2% in capital spending in 2015.
*Source: Ernst & Young Eurozone Forecast Spring edition March 2013
STATUS REPORT- SPAIN
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%
The unemployment rate stood at 26% of
Unemployment rate
the workforce at the end of 2012 and it is
Forecast
expected that it will continue to rise until
30
25
early 2014. Amid ongoing wage restraint,
20
additional job losses will contribute to a
15
further decline in household income this
10
year. As a result, consumer spending is
5
expected to fall by 2.6% in 2013, before
0
stabilizing during 2014. As the economy
starts creating new jobs, incomes will rise
and lead to a gradual recovery of consumption in subsequent years.
Exports are continuing to benefit from improvements in Spanish competitiveness and should be well
placed to take advantage of the more favorable external environment later this year. Export volumes
are expected to rise by 4.8% in 2013, which will help the current account to move into surplus for the
first time since 1987. Expected budget deficit for 2012 was 7.5% of GDP, a little higher than the
Government’s preliminary estimate of 6.7% and well above the official target of 6.3%.
With the economy still in recession, the risk of continued fiscal slippage is significant, adding to the
threat of an adverse financial market reaction.
Spain (annual percentage changes unless specified)
2012
2013
GDP
-1,4
-1,6
Private consumption -2,2
-2,6
Fixed investment -9,1
-6,5
Stockbuilding (% of GDP) 0,8
0,3
Government consumption -3,7
-4,5
Exports of goods and services 3,1
4,8
2014
0,2
-0,1
-0,2
0,2
-3,4
4,2
2015
1,1
1,0
2,0
0,1
-1,0
4,4
2016
1,4
1,4
2,1
0,2
-0,3
3,4
2017
2,0
1,6
2,1
0,4
0,7
3,3
-3,8
1,1
3,8
3,3
2,6
2,4
25,1
-0,8
2,0
26,7
1,4
1,0
26,7
1,4
0,9
25,9
1,4
1,0
25,1
1,4
1,0
24,0
1,5
-7,5
-5,8
-3,9
-2,4
-1,4
-0,4
82,0
90,3
95,5
98,4
99,9
99,6
Imports of goods and services -5,0
Consumer prices
Unemployment rate (level)
Current account balance (% of
GDP)
Government budget (% of
GDP)
Government debt (% of GDP)
STATUS REPORT- SPAIN
Source: Ernst & Young Eurozone Forecast Spring edition March 2013
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INDIA – SPAIN BILATERAL ECONOMIC RELATIONS
Economic and commercial relations between India and Spain have been growing steadily. The last two
years have seen substantial growth in trade relations between the two countries. Agreement on
Avoidance of Double Taxation between the two countries was signed in February 1993 followed by a
Bilateral Investment Protection Agreement in 1997.
TRADE
India-Spain bilateral trade for the year 2012-2013 stood at USD 4.68 billion decreasing by around 2.5%
from the year 2011-2012. The balance of trade has been in India’s favour. Bilateral trade was impacted
negatively in 2009 as a result of the financial/economic crisis of 2008-09. The trade which was showing
signs of healthy growth, contracted by 12% in 2009, but for 2010 it registered a volume of USD 34.05
billion (+ 29.70% yoy growth).
India-Spain Bilateral Trade (Fig in USD million)
EXPORT
%Growth
IMPORT
%Growth
TOTAL
TRADE
%Growth
India's
Trade
Balance
Source: Ministry of Commerce and Industry, GoI
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
1,878.66
2,506.08
2,293.59
22.09
995.64
58.69
3,289.23
2,538.15
10.66
1,023.80
2.83
3,561.95
2,029.26
-20.05
1,095.53
7.01
3,124.79
2,565.29
26.42
1,487.58
35.79
4,052.87
2,999.27
16.92
1804.11
21.28
4,803.28
2,865.48
-4.46
1,814.69
0.59
4,680.17
1251.25
31.25
1,297.94
8.29
1,514.36
-12.27
933.73
29.70
1,077.71
18.52
1,195.17
-2.57
1,050.79
627.41
2013-14
(Apr-Jun)
648.25
425.47
1073.72
Spain ranks 40th in value terms of bilateral trade with India, among all countries of the world, featuring
above economic giants such as Canada, Sweden, Norway, Finland and Ireland.
Amongst countries exporting to India, Spain holds the 41st position. Amongst countries importing from
India, Spain holds 28th position.
Major items of India’s Exports to Spai n
Major items of India’s exports to Spain include textiles, chemical products, leather goods, marine
products, coffee, laminates, steel plates and pipes, dyes and pigments, auto components and
automobiles (Tata 4 wheel drives), spices, vegetable extracts, mica, wood, silk, jute products, carpets,
two-wheeler accessories, artificial jewellery, etc. New products such as marble and granite, Indian
furniture and silk furnishings, stainless steel ware also have started coming into Spain.
Major items of India’s Imports from Spain
Major items of India’s imports from Spain include amino compounds, laminated products, opaque
pigments, halogenous derivatives, antibiotics, piston motors, ketone and quinone, raw aluminium, iron
and steel products, vegetable (mainly olive) oil, nuts and fruits, rubber products, leather items,
STATUS REPORT- SPAIN
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pharmaceuticals, petroleum derivatives, polymers, electrical products, hand-tools, machinery and
automobile accessories. Spain also exports electronics for Indian defense Industry.
INVESTMENTS
Spanish Investments in India
Spain ranks 12th in terms of investment with cumulative FDI inflows into India amounting to USD 1.57
billion (April 2000 – June 2013), accounting for 0.79% of total FDI inflows. (Inflows received through
FIPB/SIA route RBI’s automatic route & acquisition of existing shares)
More than 140 Spanish companies have activities in India having investments in infrastructure,
renewable energy, auto components, water desalination/purification and single brand retail.
According to Invest in Spain, Spanish investments in India rose five-fold to USD 158 million in 2008
compared to the previous year. Spanish investment in India was USD 158 million during the first three
quarters of calendar year 2008; this had increased by 500% from the 2007.
Spanish firms such as Navantia (naval construction) Dragados (container terminal), Grupo Roca
(parryware), Gropo Antolin (auto components) Mapfre (insurance) Televent (urban infrastructure),
Isolux (infrastructure) Cobra (infrastructure) and Indolink (consultancy) set shop in the country in the
during 2008-2009.
Though some major Spanish companies - Duro Fulguera, Cipsa, Isolux, Acciona, Simon, Banco Popular
etc. have entered into India, it is felt that Spanish investment in India is not commensurate with the
potential that exists in sectors such as tourism, infrastructure, food processing, energy-both renewable
and non-renewable, and the automobile industries.
Major Spanish investment in India :

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One of the Spanish firms, Caf (Constructions y Auxiliar de Ferrocarriles), worked with Reliance on
the stretch of the Delhi metro project connecting the railway station to the airport (Source:
Embassy of Spain).
After Tata-Inditex tie up in 2009, Spanish fashion retail giant Zara has opened its retail stores in
Bombay and Delhi in 2010.
Gestamp Automotive India Ltd, a subsidiary of the Spanish company GESTAMP Automocion,
inaugurated its Metal parts manufacturing facility in Chakan in 2010(Source: The Punekar). Set up
with an investment of over Rs 475 crore, the plant at Chakan is one of the biggest investments by a
Spanish company in India.
Important food-processing group Agrolimen.
Steel major Sidenor has a 50% share in MUSCO (Mahindra Ugine Steel Ltd- a speciality steel maker
of the Mahindra and Mahindra group).
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
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El Corte Inglés, the Spanish departmental store giant, regularly buys Indian goods, particularly
garments and since 2004, have opened a Liaison Office in Gurgaon and maintains a warehouse in
India.
Gamesa, the biggest Spanish company in the Wind Energy sector has started operations in India
and have already set 17 wind turbines in the state of Tamil Nadu.
Acciona has set up two wind farms in Karnataka and is looking forward for expanding its presence
in India.
Iberdrola is looking at some options in the renewable energy in India.
ARIES is exploring possibility of establishing solar thermal plants in India.
P4R, a Consultancy Company under the Ministry of Industry, Tourism and Trade has opened a
representative office in India in 2008.
Banco Santander is in the process of having its presence in India.
In March 2006, three major Spanish companies signed agreements for investing in India:
 The sanitary ware company ROCA bought 50% of Parryware at the cost of € 50 million (USD 78
million approx) to become the largest company for sanitary fittings in the world. ROCA invested
USD 111 million in 2008 in India.
 M/s Duro Felguera had won the contract (at the cost USD 100 million) of equipment building for the
new port of Gangavaram in Andhra Pradesh. The project has been completed in July 2009 and they
are looking at some more opportunities in India.
 Aldeasa-ITDC combine has bagged the Mumbai International Airport’s duty free retail contract for
Rs 571 crore (USD 98 million approx) for the next three years.
Besides, an Indian subsidiary of ELSAMEX S.A. was awarded a contract for developing part of Orissa
highway by NHAI in March 2001. In October 2007, a big Spanish infrastructure company FCC, was
selected by Delhi Metro Rail Corporation to complete the metro connection up to the airport. Banco
Sabadell and Banco Popular in a JV with Capital Trust have already established branches in India.
Important Spanish companies such as Acciona (wind energy), ACS (infrastructure, for a container
terminal in Mumbai port), Estampaciones Sabadell (auto components), Gamor (machinery), and
Telvent (Information Technology) invested in the Indian market in 2007.
During the year 2011, the Spanish infrastructure companies, such as Isolux and San Jose bagged
transmission line and road contracts in Uttar Pradesh and Rajasthan respectively. Acciona, Gamesa and
Windar expanded their wind and solar energy projects in Tamil Nadu, Andhra Pradesh and Gujarat.
STATUS REPORT- SPAIN
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Spanish Investment by sectors
Investment from Spain to India (2000-2012) (fig in thousand €)
Sector
Food and beverage industry
Source: Ministry of Economy and Competitiveness, Spain
Stock
14.900,00
%
1,19
505.960,00
12.360,00
40,54
0,99
2.540,00
0,2
214.030,00
17,15
Manufacture of other mineral products, except
machinery
62.690,00
5,02
Manufacture of electrical equipment
12.690,00
1,02
21.930,00
155.140,00
1,76
12,43
8.090,00
0,65
148.290,00
11,88
1.790,00
0,14
Specialised construction activities
15.010,00
1,2
Wholesale except motor vehicles
16.590,00
1,33
Retail trade except motor vehicles
32.440,00
2,6
Warehousing and support activities for
transportation
23.190,00
1,86
Architectural and engineering activities
Total
350
1.247.990,00
0,03
100
Chemical industry
Manufacture of pharmaceutical preparations
Manufacture of rubber and plastic products
Manufacture of other non-metallic mineral products
Manufacture of machinery and equipment N.E.C.
Manufacture of motor vehicles, trailers and semitrailers
Manufacture of other transport equipment
Electricity, gas, steam and air conditioning supply
Construction of buildings
Indian investments in Spain
Indian investment in Spain has been growing and presently stands around USD 900 million. Around 39
Indian companies have an investment presence in Spain, through 100 subsidiaries including Telco, TCS,
Ranbaxy and Infosys having a presence in the field of IT, automobiles, pharmaceuticals and road
maintenance. Together they account for the creation of 10,000 direct jobs and a very significant
amount of indirect employment.
The presence of Indian-owned companies in Spain has increased, through the subsidiaries of foreign
companies established in Spain and purchased by Indian companies. Examples of this phenomenon
include the takeover of the Land Rover, Jaguar and Rover brands from the Ford group along with their
Spanish subsidiaries, by Tata, and the merger of Arcelor with Mittal Steel, resulting in Arcelor Mittal,
which has a major presence in Spain.
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In addition to these indirect operations made in the domestic market, Spanish companies have also
been purchased directly by Indian companies, as in the case of Hispano Carrocera bought by Tata and
the Elsamex Group bought by Indian firm IL&FS.
Moreover, some Indian companies have begun direct investment processes in Spain; Greenfield
projects, in sectors with a high technological content and high value-added, such as Suzlon in the
renewable energy sector and the Ranbaxy company in the pharmaceutical sector. From 2003 to 2010
India has announced 8 Greenfield projects, with an estimated investment of € 474 million (USD 737
million approx) and the creation of 1,472 jobs (source: FDI Markets, 2010)
Despite significant presence of Indian companies in Spain, the figures for investment remain modest.
Worthy of special mention is one Indian investment made in the Spanish construction sector in 2007,
which was worth € 596 million (USD 928 million approx) and accounted for 1.6% of total incoming FDI
in Spain that year.
By Autonomous Regions, the Basque Country comes in first as the main receiver of FDI, also as a result
of that major operation registered in 2007. The Madrid region and Catalonia come in second and third
places for incoming investment.
Major Indian investments in Spain

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
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In July 2013 Mahindra & Mahindra announced that they are set to pick up a 13.5% stake in Spain's
auto component maker CIE Automotive for about USD 134 million. M&M will merge all its auto
components businesses into Mahindra Forgings. Mahindra Forgings will be renamed Mahindra CIE
Automotive, where the Spanish auto components maker will hold 51.1% and Mahindra 20.2%.
Crompton Greaves acquired Spain’s smart grid automation firm ZIV Group for USD 185 million in
2012.
Tata: Tata Indica was launched in February 2002 after up gradation to Euro III standards. The
distribution of TATA vehicles in Spain has been taken over by an important Spanish group Bergé
Automocion.
Tata Group Company, Telco Construction Equipment Company (TELCON), signed a deal in March
2008 to acquire a 79 per cent controlling stake in Spain-based Serviplem SA at a cost of Euros 45
million. Serviplem focuses on manufacturing and sale of transit mixers, dry bulk tanks and pumps.
The Tata group also hopes to get a significant presence in the Aragon region in Spain as it is already
present in the region through its partnership with Hispano Carrocera SA, a bus-building company.
Tata increased its investment to total of Euro 117 million in 2009. (Tata Motors in Hispano: Euro 67
million; TELCON n Baryval Serviplem: Euro 50 million). After Tata acquiring Jaguar and Landrover,
they have now become part of Indian companies in Spain.
Mahindra and Mahindra also have marked their presence in Spain since Feb. 2002 with their
tractors.
TCS set up its Spanish branch in Madrid in 2003.
Indian travel and tour agencies, Cox & Kings (India), Travel Corporation of India and Sita have their
representatives in Barcelona.
STATUS REPORT- SPAIN
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
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Suzlon has won a contract for supplying wind turbines to Spain in early 2008, following which they
established an office in Madrid.
Cadila Zydus bought a pharmaceutical plant of Combix and established themselves as Zydus Combix
in Spain.
Indian Investments by Sector
Investment from India to Spain (2000-2012) ( fig in thousand €)
SECTOR
Source: Ministry of Economy and Competitiveness, Spain
Stock
%
Chemical industry
40.910,02
7,69
Manufacture of pharmaceutical preparations
49.203,51
9,25
Manufacture of rubber and plastic products
29.048,80
5,46
4.626,96
0,87
119.154,51
22,39
Wholesale and retail trade; repair of motor vehicles
and motorcycles
80.171,00
15,07
Wholesale except motor vehicles
61.834,59
11,62
129.806,96
24,40
4.268,90
0,80
12.860,15
2,42
212,68
0,04
532.098,08
100,00
Manufacture of motor vehicles, trailers and semitrailes
Civil engineering
Warehousing and support activities for
transportation
Computer programming, consultancy and related
activities
Real state activities
Central offices activities: business and other
management consultancy activities
Total
RECENT BREAKTHROUGHS
In pursuance of a Memorandum of Understanding on Scientific and Technological Cooperation
concluded on 12th June 2007 at Madrid during the visit of the Minister for Science and Technology, both
sides agreed upon having a Programme of Cooperation in the fields of Science and Technology for the
period of 2009-11.
The Programme identified six areas for cooperation, viz. Renewable Energy, Information Technology,
Health and Medical Research, Life Sciences and Biotechnology including Pharmaceuticals, Agriculture
Technology and Food Processing, Nano Technology. 25 Joint Research Projects have already been
identified, a Workshop on Information Technology has taken place in Bangalore in June 2010 and a
Workshop on Renewable Energy in March 2011 in Seville, Spain. The two sides expressed the hope that
while ensuring continuity in cooperation in these fields, new areas of cooperation would be agreed for
the next programme of work.
A Statement of Intent on cooperation in the field of Space was signed between ISRO and INTA (Spanish
Aeronautical Institute).
STATUS REPORT- SPAIN
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PROMISING SECTORS OF INDO - SPANISH COOPERATION

Science and Technology

Energy (particularly wind energy, where Spain and India are respectively the third and the fourth
largest producers in the world)

Information and Communication Technology

Biotechnology including Pharmaceuticals, Life Sciences and Nano Technology

Agriculture Technology & Food Processing

Infrastructure

Environment & Tourism
STATUS REPORT- SPAIN
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