Austria Seeks to Strengthen Trade Relations with India

The Austrian Ministry of Economic Affairs is actively pursuing the expansion of trade ties with India. Currently, Indian Finance and Corporate Affairs Minister Nirmala Sitharaman is visiting Vienna to deepen collaboration between the two nations. Economic Minister Wolfgang Hattmannsdorfer highlighted the importance of trade policy in addressing the prosperity challenges faced by Austria in light of global uncertainties.

Hattmannsdorfer noted the adverse effects of U.S. tariff and trade policies on both the European and Austrian economies. Similarly, Finance Minister Markus Marterbauer emphasized the need to enhance economic cooperation with various partner countries to foster innovation-driven partnerships.

During her visit, Minister Sitharaman engaged in working discussions with Marterbauer and State Secretary Barbara Eibinger-Miedl. With India being the fastest-growing economy among G20 nations and projected to achieve a GDP growth rate exceeding 6%, the potential for collaboration is significant. Austria, being an export-oriented nation, relies on robust trade relations to sustain its prosperity and social welfare.

Hattmannsdorfer stressed the necessity for Austria to reassess and diversify its trade strategy, especially given the shifting dynamics in U.S. trade policy. The U.S. has traditionally been the second-largest export market for Austria, following Germany, and ahead of Italy. On the import side, Germany and China lead, with the U.S. also ranking prominently.

In response to the international trade tensions initiated during the Trump administration, the European Union is adopting a firm stance. Hattmannsdorfer commended the EU's unified approach, asserting that it is crucial for Europe to negotiate with the U.S. assertively while preparing countermeasures if negotiations falter. Potential actions may include imposing tariffs on American tech giants, as suggested by European Commission President Ursula von der Leyen.

Hattmannsdorfer warned that a trade war would yield negative repercussions for both Europe and the U.S., citing market volatility and rising inflation as significant concerns. He reiterated Austria's urgent need to refine its export and trade policies to maintain its economic standing and highlighted India as a focal point for future growth.

India ranks as the third most important market in Asia for Austria, following China and Japan. Over the past decade, trade volume between Austria and India has more than doubled, reaching EUR2.8 billion. In 2024, Austrian exports to India grew by 2.6% to EUR1.3 billion, while imports surged by 7.1% to EUR1.5 billion, resulting in a trade deficit of approximately EUR200 million. However, Indian investments in Austria increased significantly, from EUR117 million in 2016 to EUR1.2 billion in 2024, while Austrian investments in India rose from EUR427 million to EUR762 million during the same period.

In a joint press conference, Hattmannsdorfer and Sitharaman agreed to strengthen collaboration, emphasizing their countries' reliability as partners. Sitharaman acknowledged India's role as a gateway to Asia and the Global South, recalling Indian Prime Minister Narendra Modi's commitment to enhancing the partnership with Austria during his successful visit in July 2024.

The focus areas for collaboration will include green and digital technologies, infrastructure, renewable energy, water management, life sciences, and transportation.

Hattmannsdorfer indicated that Austria fully supports a free trade agreement between India and the EU, while also aiming to bolster bilateral trade relations and enhance cooperation on immigration matters, specifically through the Rot-Weiß-Rot-Karte program for skilled workers. The aim is to increase the number of applications from India, which were at 700 last year, with a target to double this number in the medium term, particularly in the IT sector.

With India hosting the third largest startup ecosystem globally, boasting 119 unicorns, Hattmannsdorfer sees significant development opportunities. Austria's Global Incubator Network (GIN) will explore the possibility of including India in its framework, which currently connects investors and startups from Japan, Singapore, South Korea, Hong Kong, China, and Israel.

A bilateral trade commission will also be established this autumn to identify and eliminate existing trade barriers, with a delegation visit to India planned for the second half of the year.

The Austrian Industrial Association (IV) has welcomed the intensified collaboration with India, stressing the importance of open dialogue and international partnerships amid global uncertainties. With approximately 150 Austrian companies operating in India, contributing to over 12,000 jobs, the focus on diversification and new partnerships is deemed crucial. The ongoing negotiations for an EU-India free trade and investment agreement are seen as vital for strengthening economic ties.