India, with its ability to maintain and develop relations with both Western and Eastern power blocs, positions itself as a geopolitical bridge-builder that Austria could benefit from
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Prime Minister Narendra Modi has embarked on a state visit to Austria in the context of the 75th anniversary of diplomatic relations between India and Austria. This trip is historically significant as Modi is the first Indian leader to visit the neutral country in 41 years after former Prime Minister Indira Gandhi (in 1983). The relationship between India and Austria has historically been cordial, yet underexplored. Prime Minister Modi's visit to Vienna, accompanied by a high-ranking delegation including Foreign Minister Dr S Jaishankar and National Security Advisor Ajit Doval, signals a robust intent to deepen and broaden bilateral ties.
Against the backdrop of Prime Minister Modi's upcoming visit to Vienna, it is important to note that the Modi 3.0 cabinet not only represents a political continuum but also has unchanged key positions. As a sign of continuity, Modi retained four of his senior ministers in the areas of home affairs, defence, finance and foreign affairs. During his stay in Austria, Modi has held several high-level meetings. He has met with President Alexander Van der Bellen and Chancellor Karl Nehammer as well was with Foreign Minister Schallenberg and business CEOs. In his statement ahead of the visit, Modi stressed that Austria is a loyal and reliable partner of India and that both countries share the ideals of democracy and pluralism. The talks have focused on new areas such as innovation, technology and sustainable development. Discussions on trade and investment opportunities aimed to promote mutually beneficial economic relations.
Against the backdrop of Prime Minister Modi's upcoming visit to Vienna, it is important to note that the Modi 3.0 cabinet not only represents a political continuum but also has unchanged key positions.
In addition to the bilateral talks between India and Austria, regional and global issues have also played a role. A key topic has been the Russian war against Ukraine and its geoeconomic implications for the Global South, particularly with regard to energy and food supplies, inflation, and peace efforts. Further discussions might have also addressed the global geopolitical turmoil with China's increasing assertiveness as well as the growing activity of terrorist networks such as ISPK in Afghanistan. India is increasingly positioning itself as an advocate for the countries of the Global South, which are severely affected by the global impact of the war in Ukraine and is concerned about the rise in terrorist activities and attacks in the region.
A key goal of this visit is to deepen economic relations. Modi and Nehammer have met with Austrian industry representatives to explore opportunities for mutual trade and investment projects. There is great potential for Austrian companies, particularly in the areas of infrastructure development, agricultural infrastructure and the manufacturing industry.
During his election campaign, Modi announced extensive plans to strengthen the Indian economy. He has promised that India will become the third largest economy after the United States (US) and China. India is currently the fastest growing economy among the G20 countries, with an impressive growth forecast of around eight percent. In addition, unlike Europe, India has extremely positive demographics and last year overtook China, with 1.4 billion people, as the most populous country in the world. In the same year, India displaced Great Britain from fifth place amongst the world's largest economies.
India is now considered one of Austria's most important trading partners outside the EU, with a trade volume of EUR 2.7 billion. Austrian direct investment in India amounted to EUR 733 million at the end of 2023, while Indian investment in Austria recently reached EUR 1.6 billion. There is enormous potential for further growth, especially in view of the geoeconomic ambitions of the new EU Commission, which wants to negotiate a free trade agreement with India during this term. Such an agreement would not only facilitate access to the EU common market but would also expand talks on regulated labour migration to counteract the shortage of skilled workers that is noticeable in many countries, including Austria.
India is now considered one of Austria's most important trading partners outside the EU, with a trade volume of EUR 2.7 billion. Austrian direct investment in India amounted to EUR 733 million at the end of 2023, while Indian investment in Austria recently reached EUR 1.6 billion.
The importance of geopolitics and energy is increasing worldwide. Issues such as development and sustainability, emerging technologies and digitalisation, and renewable energies, especially green hydrogen, are high on the agenda in the Indian context. India is striving to become an international hub for green hydrogen and is also investing heavily in solar energy. The country is also involved in various bodies and forums, such as the Quadrilateral format with the US, Japan and Australia, to improve the resilience and reconfiguration of supply chains and access to rare earths and metals as well as pharmaceutical products that are crucial for the energy transition, digitalisation and healthcare.
India is also planning to develop several transport and connectivity corridors, including the IMEC corridor (India-Middle East-Europe corridor) announced at the G20 summit in India. This multimodal sea and land corridor offers great opportunities for Austrian trade, particularly with regard to deepening relations between India and Italy. This means, among other things, significant public investment in domestic infrastructure, but also in the agricultural sector and in increasing productivity. Railway Minister Ashwini Vaishnav has announced plans for 2,500 new passenger coaches and 10,000 additional freight wagons. In addition, 50 new Amrit Bharat trains are to be produced to modernise the fleet before the 2024 Union Budget. Given the Indian government's consistent focus on infrastructure projects since 2014, the market is eagerly awaiting a growth-oriented Union Budget 2024 with special attention to energy, electricity, railways and other infrastructure areas. Austrian companies have proved their excellence in many of these niches in the past and could be a valuable partner when it comes to railways and other infrastructure areas but also clean and green energy. These exciting developments open up significant opportunities and development possibilities for Austrian industry, both in the areas of green tech and renewable energies and in the modernisation of industry, such as plant engineering, automation, the automotive sector and transport infrastructure. Special niches such as startups and digitalisation are also gaining importance. India is already the country with the most digital transactions and further discussions could arise in the area of digital financial services, especially in light of the development of a bilateral and multilateral settlement systems using national currencies.
In conclusion, leveraging India's economic landscape for high-quality and cost-effective manufacturing under the "Make in India" programme positions the country as a prime destination for global supply chains, serving both domestic and international markets. The Production Linked Incentive (PLI) scheme is a strategic initiative designed to attract global manufacturing companies in critical sectors such as semiconductors, medical devices, and solar PV cells. The synergy between India's economic strengths and skilled workforce, combined with Austrian technological expertise, creates a robust foundation for sustainable business growth and development.
It is worth highlighting that until recently, Chancellor Nehammer was the only EU leader to visit Russian President Putin in Moscow since the beginning of the war in Ukraine. This controversial trip, together with the recent visit of Hungarian Prime Minister Viktor Orbán to Russia and his subsequent surprise trip to China, shows a different understanding of diplomatic aspirations in the European context, which is, however, not in line with the common position of the EU member states and the EU institutions. While India manages to maintain and successfully develop its relations with both the Western and Eastern power blocs, it could act as a geopolitical bridge-builder in global affairs and crisis area—a role that Austria, as a neutral state in Europe, has repeatedly envisaged for itself, but for which it lacks the geopolitical and geoeconomic exposure to exercise.
India has played a very important and mediating role on the world stage in the recent past, particularly at the recent G20 Summit in New Delhi. Despite earlier concerns from China and Russia about addressing the Russian war in Ukraine, India managed to formulate a joint statement that highlighted the human suffering and economic impact of the war but avoided direct condemnation of Russia. This diplomatic achievement underscores India's ability to mediate and reach compromises between various world powers as a geopolitical bridge-builder, while maintaining the strategic autonomy of its own decision-making and putting national interests first.
India has played a very important and mediating role on the world stage in the recent past, particularly at the recent G20 Summit in New Delhi. Despite earlier concerns from China and Russia about addressing the Russian war in Ukraine, India managed to formulate a joint statement that highlighted the human suffering and economic impact of the war but avoided direct condemnation of Russia.
The ongoing war in Ukraine and its long-term effects have been another major focus of the bilateral talks between India and Austria. PM Modi arrived directly from Moscow where he met with President Putin and further deepened the special and privileged relationship with Russia. In Vienna, he emphasised once again that "now is not the era of war," advocating for resolving problems through "dialogue and diplomacy" rather than on the battlefield. This phrasing, which Modi had previously used with Vladimir Putin in September 2022, was seen as his clearest criticism of Russia's aggression to date. India continues to navigate a delicate balance between the West and Russia, positioning itself as a bridge-builder between the East and West. This strategy is crucial for India, particularly in asserting itself against China.
In this context, Austria serves as a strategic destination for India in Europe, maintaining neutrality since 1955, with historical ties to both the Soviet Union and Russia. Despite ongoing tensions, Austria's relations with Russia remain economically significant due to substantial Russian investments, heavy reliance on Russian gas, and extensive financial networks, exemplified by the Austrian bank Raiffeisen International's operations in Russia. The ongoing war in Ukraine remains a significant issue, with both India and Austria agreeing on the need for a "comprehensive, just, and lasting" peace in accordance with the UN Charter. In the Global South, India holds a unique and credible position, further enhancing its role as a mediator on the global stage. In addition, both sides shared many overlaps in their positions on the dangers and risks posed by terrorist attacks and the need to resolve the conflict in the Middle East. Both countries are also known for their political support for Israel, but also for their energy and trade interests in Moscow.
Prime Minister Modi's visit to Austria offers a significant opportunity to strengthen bilateral relations. India's growing economy and positive demographic development create a solid basis for closer cooperation. Austrian companies, so far underrepresented by number and scope of activities, can benefit from India's extensive investment programmes, especially in infrastructure and green technologies. The planned free trade agreement between the EU and India could facilitate access to the EU internal market and encourage labour migration, which is particularly important given the labour shortage in Europe, including Austria. The India-Middle East-Europe corridor will open additional trade routes, including to Austria, thus strengthening economic and trade ties. These developments offer a wide range of opportunities for cooperation in the areas of technology, sustainable development and trade, from which both countries can benefit in the long term.
Against this backdrop, comparing the strategic interests of India and Austria in strengthening bilateral relations reveals a complex dynamic. India, with its ability to maintain and develop relations with both Western and Eastern power blocs, positions itself as a geopolitical bridge-builder. Austria, on the other hand, as a small-scale, extensively export-oriented nation, has substantial reasons to diversify and deepen its international relations, especially with a large and rapidly developing country like India. Despite Austria's unique position as a neutral state in Europe or its controversial diplomatic engagements, such as Chancellor Nehammer’s visit to Moscow after the beginning of the Russian war against Ukraine, the country lacks the geopolitical and geoeconomic clout of India. Thus, for Austria, expanding relations with India opens up significant economic and technological avenues, aligning with its national interests to foster growth and innovation. Thus, while both countries stand to gain, Austria arguably has a more pressing need to strengthen this relationship due to its reliance on exports and desire to expand its global diplomatic and economic footprint.
Velina Tchakarova is a Visiting Fellow with the Observer Research Foundation.
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With over two decades of professional experience and academic background in security and defense Velina Tchakarova is an expert in the field of geopolitics. Velina ...
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