Investing in India is often seen as an area of unfulfilled potential for Polish firms, given the size and development prospects of India’s economy – the world’s third-largest by purchasing power parity.

Total Polish FDI in India amounted to just €9 million in 2010, compared to €17 million in Kazakhstan and €30 million in Iran, according to National Bank of Poland data. Although that was a particularly lean year, experts still see plenty of room for improvement.

Two Indian organizations paid visits to Warsaw earlier in September to tout investment opportunities and strengthen business ties between Poland and India.

Source: Gujarat Industrial Development Corporation

Barriers to business

However, they face a tough task in changing the mindset of many Polish companies. “There are historical reasons behind relatively low levels of investment by Polish firms in India,” said Marek Orłowski, CEO of Soma, a company that organizes business missions abroad for Polish companies.

“India was a dominion of Great Britain, so many Polish managers see it as closed to them. Moreover, it is difficult to establish a company there since foreign firms have to establish joint ventures with an Indian partner in order to launch an enterprise,” he added.

The Indian market is also not the most amenable to investors. According to the World Bank’s latest Ease of Doing Business ranking, India is ranked a lowly 132nd, compared to Poland, in 62nd place.

Polish activity

Nevertheless, Polish companies are active in India, with some of the more notable investments there including Toruńskie Zakłady Materiałów Opatrunkowych’s hygiene products factory in Dindigul, and Can-Pack Poland’s metal packaging plant in Aurangabad.
Moreover, according to Poland’s Economy Ministry, chemical firm Azoty Tarnów has considered establishing a joint venture for the production of caprolactam in Gujarat. The company could not be reached for comment.

Poland’s Economy Ministry says Polish firms are especially well-equipped to launch investments in India in the mining, power and defense industries.

“The Indian market is growing fast and we can expect very strong growth in Polish investments there over the next couple of decades,” said Mr Orłowski.

A noticeable increase

When it comes to Indian investment activity in Poland, total cumulative Indian FDI at the end of 2010 amounted to zł.226 million, compared to total Polish FDI in India of zł.524 million.
However, there has been a recent noticeable increase in Indian investments in Poland in the IT and BPO sectors, with services firm Zensar locating in Gdańsk and HCL in Kraków.

Heavy industry firms including ArcelorMittal are also present in the Polish market, while packaging company Uflex made a E65 million investment in Poland last year.

Poland is expected to grow in popularity among Indian companies, since it offers a gateway to Western European markets and has a robust, if slowing, economy.

“Poland is a very good destination for investment, it is doing very well right now” said Shri B.B. Swain, managing director of the Gujarat Industrial Development Corporation.

“It is a rare economy in Europe in that it has grown over the past few years,” he added.