India-Ireland Trade and Investment Opportunities Post-Brexit

The last few years witnessed a colossal transformation of the international trading systems. These events, especially Britain’s exit from the European Union (EU), Brexit have underscored the importance of trade diversification. Within the EU, Ireland is a key trade and investment partner for India. In the year 2020, India’s exports to Ireland accounted for 1.6% of India’s total exports to the EU and imports accounted for 1.2% of India’s total imports from the EU. India is a net exporter of goods to Ireland and there is potential for increasing trade further. India’s trade in services with Ireland is four times the bilateral trade in goods and there is a potential to increase it further. Ireland is among the top countries in Europe that speaks English as a primary language. There are synergies between the two markets, making Ireland an attractive base for India to access and export services in the EU market, especially after Brexit. With this background, using secondary data and information, this paper explores trade and investment opportunities between India and Ireland.

Bilateral trade in goods between India and Ireland increased at the rate of 6.5% over the previous decade. It peaked in 2014 largely because of export of airplanes and other aircrafts, which accounted for nearly 40% of the total exports from India to Ireland in that year. Subsequently over a span of six years, total trade fell from $1.26 billion to $947 million. Commodity-wise analysis of export data shows that nearly 38% of the value of India’s total exports to Ireland in 2020 comprised of organic chemicals, which are the basic raw material for pharmaceutical products while about 33% of the value of India’s total imports from Ireland in the same year comprised of machinery and mechanical appliances. Seventy per cent of the top 30 products exported from India to Ireland are accounted for by high skill and technology intensive items.

Although the total bilateral trade in 2020 was $947 million, in which India’s exports accounted for $543 million, there remains a huge untapped trade potential between India and Ireland. Trade potential refers to the value of trade which can be traded between India and Ireland, rather than by the two countries with the rest of the world. It is estimated that India’s export potential to Ireland, for products in which India is globally competitive, is $19 billion for the year 2020. Of this, 71% cent accrues to the top 50 products with $13.5 billion export potential. Within the top 50 products, 21 products were traded in 2020 (henceforth referred to as currently traded products accounting for 65% of the export potential, while there were 29 products that had potential, but were not being traded (new products with export potential) which accounted for 35%.

Interestingly, out of the 21 items that are currently exported and have high potential, 11 are also among India’s top 30 export items to Ireland. This includes pharmaceutical products with 27.3% share in the value of top 50 export potential items, followed by organic chemicals, nuclear reactors and machinery. This trade potential can be released by overcoming tariff barriers and non-tariff barriers. In fact, non-tariff barriers, particularly those associated with product quality and standards – are a bigger obstacle for the developing countries to export to the developed markets. Among India’s top 50 products with export potential to Ireland, many products are skill and technology intensive manufactures. However, India’s technology intensive manufacturers – although competitive and exportable to several other countries – are possibly unable to meet the EU / Irish product standards, to ensure the safety and protection of human health and the environment in the EU market. Pharmaceutical products are one of the top export potential items, however, access to new drugs is also subject to a lengthy decision-making process.