Spain Finds an Economic Niche in India

By Subhashis Mittra
THE strong bilateral, regional and economic ties that New Delhi shares with Madrid moved to a higher trajectory during the recent visit of Spanish King Juan Carlos to India.

The two sides signed five pacts, including a protocol for amending the over 19-year-old double taxation avoidance pact to check tax evasion. The agreement is seen as a significant move aimed to stimulate effective exchange of information on tax evaders between the two countries and getting details of financial transactions of domestic companies.
The document, signed by the Finance Minister, Mr P Chidambaram and Spanish Foreign Affairs and Cooperation Minister, Mr Jose Manuel Garcia-Margallo Marfil, is expected to enable assistance in collection of taxes between India and Spain. It will reduce obstacles in mutual cooperation between the two countries.
Double Taxation Avoidance Agreements
The two countries had signed the agreement for avoidance of double taxation and prevention of fiscal evasion on February 8, 1993, in New Delhi.
As black money has become a major issue of concern, India has started negotiating its tax avoidance pacts, popularly known as DTAAs (Double Taxation Avoidance Agreements) with over 75 countries, to get banking-related information in line with international norms. The latest move is aimed at strengthening the exchange of information relating to tax evasion, money laundering and other criminal activities.
India and Spain also signed a MoU for collaboration between their defence industries and exchange of personnel. As per the MoU, signed by Defence Minister, Mr A K Antony and his Spanish counterpart, Mr Pedro Morenes Eulate, the two sides have agreed to facilitate defence cooperation by exchanging defence related experience, information, encouraging visits of personnel, collaboration in defence industry and other similar areas of cooperation. This is the first defence pact between India and Spain and signals possibilities of arms sales by Spanish companies to India.
Spain has been trying to sell a number of major weapon systems to India and is also one of the four partner countries offering the Eurofighter combat aircraft to India for its tender for 126 fighter jets. Spanish firm Navantia is also planning to offer its S-80 diesel electric submarine for Indian Navy’s Project 75-India under which it plans to procure six large conventional submarines at the expected cost of more than Rs 50,000 crore. Its defence firms such as INDRA are also doing business with Indian armed forces in areas of radar and communication.
Bullet Train Service
During the Spanish King’s visit, the Indian Railways entered into an agreement with Spain for exploring possibilities of introducing bullet train service and improving safety features in train operations in India. Spain has a modem railway network linking all major towns and cities.
Under the pact, both the countries are to promote cooperation and information exchange in the areas of high speed railway, upgrading of speed of passenger trains on existing lines, improving safety of train operations, modernising rolling stock, construction and maintenance technologies for track, bridges, tunnels, power supply systems, signalling and telecommunications and other cooperation in railway related technology developments.
Railways is in the process of setting up a high-speed rail authority to run trains at 300 km/hour speed on seven selected routes and at present pre-feasibility study on seven identified corridors is underway.
Spanish consultant Eneco has been hired to carry out studies in the Howrah-Haldia (135 km) route and it has submitted the initial report. The identified routes for proposed bullet train service are Pune-Mumbai-Ahmedabad (650 km), Delhi-Chandigarh-Amritsar (450 km), Delhi-Lucknow-Patna (991 km), Hyderabad-Chennai (644 km), Chennai-Bangalore-Thiruvananthapuram (850 km) and Delhi-Jaipur-Jodhpur (591 km).
Road Infrastructure Development
India also signed a preliminary agreement with Spain for enhancing cooperation in the area of road infrastructure development. The MoU is aimed at promoting efficient and environmentally sustainable transport systems and to institutionalise a technical and scientific cooperation in the fields of road infrastructure, construction, maintenance and management of roads.
King Carlos, who brought with him a large business delegation to underscore the India focus, said during the time when Spain is facing challenges because of economic crisis, there is a need to strengthen economic ties between the two countries.
“Indian investments are very important for us. We have great opportunities for Indian businessmen. Enormous potential exists to strengthen our economic and trade ties,” King Carlos said addressing members of ASSOCHAM, CII and FICCI. He said Spain is very competitive in areas like infrastructure development and renewable energy. Currently, the bilateral trade between the countries stands at about $6 billion.
At a ceremonial banquet in honour of the visiting Spanish King, the President, Mr Pranab Mukherjee reassured the King that India is determined to provide a conducive environment for business and industry to invest.
Talking about terrorism, Mr Mukherjee said, “Terrorism has emerged as one of the biggest threats to international peace and security. Sadly our two countries have, repeatedly, been victims of some of its most deadly manifestations. To defeat this menace, the global community must take concerted action against terrorists and their sponsors.”
But, experts are of the view that since trade and investment between both the countries are below the potential, there is a need to take steps to boost economic ties.
Another possible area of cooperation could be fashion designing institutes of both the countries. Enormous opportunities are present in India. Spain is a global leader in fashion and designing.
Spain, home to some of the picturesque locales in Europe, also signed a pact with India in the area of co-production of films. The two countries signed an audio visual co-production agreement in the area of feature films, documentaries and animation films. The agreement provides opportunities for both the countries to pool their creative, artistic, technical, financial and marketing resources to co-produce films.
The co-production agreement would provide an opportunity to create and showcase ‘soft power’ of the two countries and it would also lead to generation of employment among artistic, technical as well as non-technical personnel engaged in the arena of film production including post-production and its marketing, adding to the country’s GDP. 
Mr Mukherjee too had a word of appreciation for the Spanish culture being showcased by some of the Indian films, especially the famous ‘Tomatina’ festival, which was featured prominently in a recent Hindi movie. “Indian films shot in Spain have brought the vibrancy of Spain to Indian audiences and I am told that the ‘Tomatina’ festival has caught the imagination of many young Indians!