Vincenzo De Luca has been Ambassador of Italy to India since 18 December 2019. Throughout his career, he has worked in the private sector and in the internationalisation of the economic system. He has been posted in Khartoum, Tunis, and Shanghai. He was General Manager for the Promotion of the Country System from 2016 to his appointment as Ambassador, after serving in the same Department as Deputy General Manager and Central Director for the internationalisation of the Country System and territorial autonomies.
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InvestorVisa: Ambassador, as both your diplomatic career and private sector one revolved around it, you possess extensive knowledge of Italy’s internationalisation programmes. What do you think of the growing emphasis on economic diplomacy?
De Luca: In an increasingly interconnected and globalized world, adding economic and commercial responsibilities to the purview of traditional diplomacy was inevitable. Embassies, as leaders of the Sistema Italia abroad, have gradually played an increasingly critical function in supporting the internationalisation of businesses. The Commercial Offices of our diplomatic-consular network mediate with local counterparts. They proactively lobby foreign accreditation authorities; guide and support Italian companies looking to participate in tenders for international contracts; offer their good offices during the opening phases of a peaceful settlement of trade disputes; support Italian companies in accessing new markets and promote the removal of tariff and non-tariff barriers. This multidimensional example of “useful diplomacy” has recently been recognized by the 132/2019 Law, which transferred the competences concerning international trade from the Ministry of Economic Development to the Ministry for Foreign Affairs. The latter also now controls the ICE Agency, establishing guidelines and monitoring its activities. These reforms go in the right direction, as they allow for more cohesive and effective support from governmental institutions to Italy’s internationalization programme and a more impactful promotion of trade.
Economic and commercial partnerships between Italy and India are more frequent with each passing year. Which are the main objectives of the Italian diplomatic network in India? How does the Embassy operate in this sector?
Despite the foreseeable pandemic-induced slowdown in trade, overall economic and commercial de relationships between Italy and India steadily increased over the last few years. Governments and companies are deeply aware of how these two economic systems complement each other perfectly. The growth of trade since 2016 demonstrates this trend: the global volume grew by 21.9%, while the value rose from 7.5 billion euros in 2016 to 9.1 billion in 2019. Moreover, our exports to India grew at a faster rate than our imports, eroding Italy’s trade deficit with the Subcontinent. Together with New Delhi’s government, we are developing a multi-year Action Plan to breathe new life into our bilateral economic relationship. This plan is structured around five pillars: green economy, energy transition, and circular economy; infrastructure, with a focus on railways; pharmaceuticals and medical devices; food processing and machinery, according to the broader Make in India strategy; lifestyle. At the same time, we are endorsing a stronger positioning of our largest companies in the Subcontinent. We understand that the so-called “national champions” are large enough to engage with such a large market and thus be able to act as trailblazers for small and medium-sized companies in the supply chain.
The pandemic profoundly affected the foundations of the global economic system. How will economic diplomacy adapt to a post-COVID world?
Economic diplomacy is already adapting rapidly to the post-COVID world. Economic and financial transactions are now taking place on a global scale, without borders, 24 hours a day, 365 days a year, at the click of a button. Production and commercial activities reached a high level of sophistication in their digitisation process, enough to stem a large amount of the potentially adverse effects of the “new” physical distancing that the pandemic brought upon us recently. The Embassy in Delhi immediately adapted to the new circumstances. We migrated all our activities to the digital space since the beginning of the emergency, allowing our companies to keep exploring and engaging with the Indian market. In this regard, we launched, together with Investindia, a Permanent Digital Platform for Economic Partnership. We arranged numerous meetings and events on this platform, and they had positive results for the positioning of our companies in India. We also pioneered the first digital industrial mission abroad, which saw the participation of about 300 Italian companies, boasting about 600 B2B meetings and over 70,000 views of our streaming session. Likewise, we are progressively setting up partnerships between the Embassy and Italian regions, building a digital network to approach trade promotion more organically. We began by getting Assolombarda and Confindustria Emilia Romagna on board, and we will gradually expand this pilot activity to connect with other regions’ entrepreneurs and associations.
What impact could the Pact for Export have on the relaunch of Made in Italy?
It could be a very positive one. The earmarked sum – 1.4 billion – is impressive and the strategy developed by the Foreign Ministry is designed to ensure a sustained relaunch of our quality exports, as it focuses on the crucial points of the internationalisation system. There are six pillars to this strategy: communication, training/information, e-commerce, trade show system, integrated promotion and facilitated finance. They make up an all-round multi-level strategy that will allow our entrepreneurs to position themselves in foreign markets successfully. I am anticipating positive returns, coming in particular from the communication side, which is essential to strengthening the Italian brand. Now that global trade is slowing down, we have to ingrain our brand into the global collective imaginary and keep alive the interest in the technology, quality and aesthetic value that our Made in Italy and territories can offer. The so-called integrated promotion represents an equally influential tool. Events such as the “Settimana della Cucina” are not only an abstract celebration of Italian food and wine. They are a concrete form of taste education, a way to discover a previously undetected demand and break ground in new markets as well as novel promotion strategies for products and brands. The same rationale applies to other events on the calendar, such as Italian Design Day.
Briefly, what do you see in the future of economic relations between Rome and New Delhi?
The future will be bright. Since 2016, bilateral relations between Italy and India drastically improved across the board. They grew more politically intense, following the visits of two Prime Ministers, Paolo Gentiloni and Giuseppe Conte, and various Ministers and Undersecretaries from the Ministries of Agriculture, Health, Environment, and Economic Development. Our deepening economic partnership mirrored these encouraging political signals closely. The immediate rebound in bilateral trade, which registered a 21.9% increase, exemplifies this trend. I expect this positive development to continue, bolstered by prominent business events promoted by the Embassy, like the Tech Summit in 2018, this year’s digital mission on food processing and a high-level bilateral CEO Forum that we are organizing this coming autumn.
India denounced the bilateral treaty on the promotion and protection of investments with Italy. Do you think that the absence of an agreement could dissuade Indian investors? How is the Italian diplomacy going to address this issue?
In our regular surveys among the Italian business community in India, we did not observe any negative repercussions over our entrepreneurs’ interest in exploring investment opportunities in the Subcontinent. Conversely, we noted a growing focus on the Indian market in a medium-long term strategic perspective. India formally denounced the treaty in March 2017, but investments made by that date are covered under the treaty’s sunset clause for another 15 years, until 2032. All other European countries also saw their treaties with India on the matter denounced. Therefore, we are working together, under EU coordination, to draft not only a robust Bilateral Trade Investment Agreement including all member states but also a Free Trade Agreement with New Delhi. As far as potential Indian investors in Italy are concerned, I do not think that the agreement’s termination discouraged them, I see a growing interest in Italy’s business opportunities instead. We have a full schedule of events planned to help potential investors, and we are working to promote Italy as a business destination, in a coordinated effort with ICE Delhi’s desk on investment attraction. Our next event will be a seminar to present the Global Attractiveness Index developed by The European House – Ambrosetti. ICE President, Carlo Ferro, will be among the panelists and will illustrate our country’s strengths to a selected audience of great Indian entrepreneurs.
From a macroeconomic standpoint, bilateral trade and investment are still well below the potential of a market such as the Indian one. On what do you think this fact may depend and how could this trend be improved?
From 2016 to 2019, Italian exports to India improved by a promising 22.28% (from 3,272 to 4 billion euros). This positive trend, although it does not reflect the potential of this partnership, suggests that Italy is playing on a par with its major competitors in Europe. In fact, according to the 2019 data reported by the UN Comtrade, Italy’s market share in India (3%) is higher than that of France (2%) and not disproportionately lower than that of Germany (7%).
This perfectible but not at all negative result could be explained by the market’s immaturity and the particularly price-sensitive attitude of the Indian consumer. The Embassy and ICE are working to address this latter problem. We are conducting an awareness campaign directed to local consumers aimed at explaining the inherent characteristics of Made in Italy, extolling the benefit of a more functional, reliable, and robust product that may be a little pricier than its Chinese counterpart, but will last over time.
In the future, the growth of the middle class in India and the increase of so-called “aspirational Indians” will generate a new, keener interest in Made in Italy, and will reduce the gap between potential and actual exports. The Indian domestic market, with more than a billion people, will be consumer-driven and a larger share of the population will gradually be able to afford Italian products. Given the vastness of India’s territory, the impetuous growth of e-commerce will allow our exports to dominate the market even more. In 2034, India will be the second-largest country in the world for online sales. Users accessing the internet from smartphones currently amount to 665 million and already 140 million customers use e-commerce platforms. It is a country in ferment, and ICE has developed a strategy to create a showcase for Made in Italy on Flipkart, India’s largest marketplace, and soon this experience will be replicated with Nykaa, a website specialized in cosmetics.
What are the most effective tools that Italy can use to promote itself in India, stirring the interest of Indian companies and entrepreneurs in the economic opportunities that a closer relationship with Italy will offer?
Communication and e-commerce, the two pillars of the Export Pact, will be the basis of a widespread awareness campaign to build a narrative around Italian industrial excellence and to improve our country’s reputation as a unique and attractive investment destination. Such strategies need a transversal and constant activity, which we could almost call a “soft power” approach. It goes hand in hand with the Embassy and ICE traditional targeted business events, our support to the delegations of Indian entrepreneurs and investors coming to Italy and constant networking between the Italian and Indian business communities.
The Indian community abroad is the largest in the world about hundreds of thousands of expats of Indian origin reside in Italy. Do you think that this tendency to emigrate and to create well-rooted communities in other countries could help encouraging more highly skilled migrants and their potential investments to settle out of India?
I am sure of it. More than 160,000 individuals compose the Indian community in Italy. It is the largest in the European Union; they integrated very well into our socio-economic fabric and significantly contribute to the Italian economy. Traditionally they used to be employed in our agricultural sector, but nowadays they can be found working in other sectors as well. Our country implemented the right policies to attract the most qualified Indian human capital, and these measures have begun to produce results over the last few years. A new generation of Indians is coming to Italy, and they are interested in taking advantage of both the learning opportunities of our increasingly internationalised university system and the advanced professional training that the best Italian companies can offer. In 2019, the influx of Indian university students to Italy grew by 30%. The number of qualified Indian workers in Italian or Indian companies operating in Italy is also steadily increasing.
The Italian investor visa scheme, to which those who make investments in Italian companies and startups can apply, is only one of the instruments adopted by Rome to stimulate foreign investment. Could such a measure be enough to ignite the interest in Italy from the Indian business community?
The coherent set of policies and instruments, what I would call the “Italy system”, is the key to igniting the interest of Indian entrepreneurs in our country. The investor visa programme is only one of the several developed by the Italian government in recent years. In addition to this, there is the start-up visa and, more generally, a strong commitment of our diplomatic-consular network to support the influx of Indian investors into Italy by issuing, for example, long-term business visas. Naturally, these instruments combine with the constant informational and promotional activity that our diplomatic-consular network, together with ICE and the Chamber of Commerce, carries out in India, including every sector of potential interest for Italy.
Together with the visa, Italy offers extremely advantageous tax regimes to those who invest or transfer their tax residence in the country. Could an Indian entrepreneur consider this an advantage to be taken into account when deciding where to invest abroad?
Yes, without a doubt. As we intend to attract investment from abroad, we implemented a series of measures to attract human capital not only to attract industrial and financial funds. For example, we recently began offering the possibility to acquire Italian residency to professionals. Italy also established many entities to improve the relationship between the state and the taxpayer, and they are very attentive to the needs of foreign investors. Indian investors can also benefit from these incentives.
The visa is also available to patrons who make donations to preserve the Italian cultural heritage. Is there such an interest in Italian culture in India that could lead an Indian entrepreneur to make such a donation?
There is a great deal of interest in Italian culture, and my everyday experiences in India can attest to that. The recent influx of Indian tourists visiting Italian art cities can be traced back to the unique charm that our country has on the Indian public. We are working to deepen the Italy-India relationship in these matters, and the protection of our cultural heritage is one of our concerns. We want to intensify the exchange of know-how, so we are working to encourage international mobility for researchers and scientists. We certainly hope that companies interested in this sector can also add to our efforts and play a role in the cultural industry.