History of Diplomatic Relations
Diplomatic relations between India and Liechtenstein were formally established in the years 1992-1993, marking the beginning of a bilateral partnership that would grow in complexity and significance over the years. The establishment of these relations laid the groundwork for future interactions, both at the governmental and cultural levels, reflecting a mutual recognition of the importance of collaboration in various fields, including trade, investment, and cultural exchange.
One of the key milestones in these relations occurred when Prince Alois and Princess Sophie, along with a delegation of 11 members, visited India from November 14 to 20, 2010. This visit marked the first high-level diplomatic engagement between the two nations, emphasizing the importance both countries placed on enhancing their ties. During this visit, the royal couple met with several prominent Indian leaders, including President Pratibha Patil, Vice-President Mohammad Hamid Ansari, and Finance Minister Pranab Mukherjee. The engagement not only established personal relationships between leaders but also included participation in the India International Trade Fair in Delhi, underscoring the potential for economic collaboration. Prince Alois also visited Mumbai, where he met with the Governor of Maharashtra, K. Sankaranarayanan, indicating a desire to strengthen ties beyond the political sphere, extending into regional collaborations.
Continuing this trajectory, Prince Alois and Prince Hans Adam II made another visit to India from October 13 to 19, 2013, focused on fostering business relationships, particularly with Gurgaon-based Savannah Seeds Pvt. Ltd. This visit was indicative of Liechtenstein's interest in engaging with India's burgeoning agricultural sector and exploring opportunities for investment and collaboration. The commitment to enhancing business relations was further complemented by the historic visit of an Indian minister; General Vijay Kumar Singh, who became the first Minister of State for External Affairs to visit Liechtenstein on April 18-19, 2016. His meetings with Deputy Prime Minister Thomas Zwiefelhofer and Foreign Minister Aurelia Frick highlighted the bilateral discussions aimed at strengthening economic ties and potential partnerships in various sectors.
Minister Singh's meeting with Prince Alois at Vaduz Castle on April 19, 2016, not only reiterated the royal family's support for nurturing India-Liechtenstein relations but also provided a platform for discussing future collaborations. This visit is considered significant as it reflects Liechtenstein's growing interest in engaging with India, a major economy in the region, and showcases India's openness to exploring new diplomatic avenues with European nations like Liechtenstein. As both countries continue to strengthen their ties, there remains a strong potential for collaboration across multiple sectors, benefitting their respective populations and economies.
Overview of Economic Relations
The economic relations between India and Liechtenstein have experienced various phases, highlighted by fluctuations in bilateral trade. In the fiscal year 2008-09, bilateral trade peaked at approximately $5 million, driven primarily by significant imports from India, which amounted to around $4.92 million. The goods exported by India included cereals, glass, and electrical machinery and equipment. However, subsequent years saw a decline in trade figures, with total trade amountsing to $2 million in 2015-16. Nonetheless, this represented a growth of 47% compared to the previous year, showcasing a potential for rebound in trading activities. During this period, India exported goods valued at $820,000 to Liechtenstein while importing $1.18 million worth of products.
Key Commodities and Trade Dynamics
The spectrum of commodities traded between the two nations underscores the diversity in their economic interactions. Major exports from India include metal alloys, stones, machine tools, mechanical seals, basmati rice, and petroleum products. On the other hand, Liechtenstein exports primarily consist of mechanical appliances, electrical machinery, dyes, pigments, glassware, aluminum articles, and precision medical instruments. The integration of such varied products illustrates a complementary trade relationship, where both nations meet specific needs through their respective strengths in manufacturing and resource availability.
Financial Cooperation and Legal Framework
Apart from the trade exchanges, financial collaboration has also defined the relationship between India and Liechtenstein. The Liechtenstein Financial Intelligence Unit (FIU) played a pivotal role in assisting India establish its own FIU, facilitating India's membership in the Egmont Group in 2007. This cooperation is crucial for enhancing transparency and combating financial crimes, especially issues related to tax evasion. The discussions began between India and the European Free Trade Association (EFTA), which includes Liechtenstein, for a Trade and Investment Agreement (TIA) in January 2012, reflecting a broader interest in economic integration.
Addressing Tax Evasion
The economic interactions also brought to light concerns regarding tax evasion involving Indian nationals who held accounts at LGT Bank in Liechtenstein. Highlighted by a 2008 report from German tax authorities, the situation prompted investigations from India's Income Tax Department. The department discovered significant tax evasion involving ₹43.83 crore (US$5.3 million) across several accounts, leading to penalties for account holders. The Supreme Court played an instrumental role in mandating the disclosure of these individuals, emphasizing the importance of accountability in international finance. In response to these financial challenges, India signed the Tax Information Exchange Agreement (TIEA) with Liechtenstein on March 28, 2013, aimed at fostering greater fiscal transparency and compliance.
Future Developments in Trade Relations
In a significant development for future economic relations, India and Liechtenstein signed a free trade agreement in conjunction with the European Free Trade Association in March 2024. This agreement holds the potential to revitalize and expand trade volumes, creating a more robust economic partnership. The agreement signifies both countries' commitment to strengthening bilateral ties and pursuing mutual economic interests, thereby enhancing the scope for growth in various sectors. As both nations work collaboratively to address financial governance and explore trade avenues, the India-Liechtenstein economic relationship may witness a renewed trajectory characterized by deeper engagement and increased investment opportunities.
Investment Overview
Between April 2000 and June 2015, Liechtenstein made a total of $9.5 million in foreign direct investment (FDI) in India. This investment, while modest in scale compared to larger economies, demonstrates a growing interest from Liechtenstein in diversifying its economic partnerships. Several Liechtensteiner firms have established operations in India, either directly or through local subsidiaries, effectively solidifying their presence in the Indian market.
Among the notable investments is Savannah Seeds Pvt. Ltd., founded in October 2010 in Gurgaon. This company serves as the Indian subsidiary of the LGT Group, which is wholly owned by Liechtenstein's royal family. The LGT Group's involvement extends beyond mere financial transactions, as its philanthropic arm, LGT Venture Philanthropy, actively invests in social ventures and non-governmental organizations in India through various means of financial support such as grants, loans, and equity investments. This philanthropic focus reflects a strategic interest in fostering sustainable development in India.
Another significant player is Hilti Manufacturing India Private Limited, a subsidiary of the Swiss-based Hilti Corporation, which is operational in Gujarat. This subsidiary specializes in manufacturing diamond cutting and polishing tools, underscoring the advanced manufacturing capabilities that lie at the intersection of Swiss engineering and Indian market needs. Furthermore, Hilti's acquisition of Bhukhanvala Diamond Systems Private Ltd. in 2008 illustrates a trend of strategic local partnerships, enhancing its operational scope in India.
Companies such as Ivoclar Vivadent and Umicore add to the roster of Liechtenstein-affiliated entities in India. Ivoclar Vivadent (India) Private Ltd. serves as a wholly owned subsidiary focused on dental products. Meanwhile, Umicore operates through multiple subsidiaries, including Umicore Autocat India Pvt. Ltd. and Umicore Anandeya India Private Ltd., emphasizing its commitment to the Indian market in areas like catalytic converters and materials technology. Additionally, Oerlikon Balzers, known for its surface solutions, has established operational centers in key Indian cities such as Pune and Bangalore, marking its expansion into the high-tech manufacturing sector.
On December 7, 2023, the ties between India and Liechtenstein were further strengthened by a visit from Indian Secretary of the Ministry of External Affairs, Sanjay Verma. His visit included a meeting at the Hilti manufacturing facility as well as discussions with Martin Frick to explore additional avenues for economic cooperation between the two nations. This visit symbolizes a commitment to enhancing bilateral relations, encouraging investment flows, and facilitating collaborative ventures that could benefit both economies in the long term. As economic ties deepen, there is substantial potential for increased innovation and investment activities that could pave the way for further integration.
Cultural Relations
The cultural ties between India and Liechtenstein have seen significant milestones, particularly through the medium of film and community events. The inaugural Indian Film Festival in Liechtenstein was a noteworthy occasion that took place on 16 November 2011. It was inaugurated by Aurelia Frick, the Minister for Foreign Affairs and Culture, in the capital city of Vaduz. This festival served not only as a platform for showcasing Indian cinema but also fostered a deeper understanding of Indian culture among the locals.
Furthermore, the India Club in Liechtenstein has been a driving force in promoting Indian culture within the country. With the backing of the Embassy of India in Bern and under the patronage of Minister Frick, the India Club organized "India Week in Liechtenstein" from 17 to 22 May 2016. This week-long event featured a variety of activities including cultural performances, exhibitions, and culinary experiences that highlighted the richness of Indian heritage. The India Club has continued to host numerous other cultural events, creating opportunities for cultural exchange and engagement between the Indian community and the people of Liechtenstein.
Despite the limited number of Indian residents in Liechtenstein, the Indian presence in the country is felt through a small yet vibrant community. As of December 2016, it was reported that only about five Indians lived in Liechtenstein, primarily due to the strict regulations regarding residential permits. These permits are granted exclusively to foreign nationals who are married to Liechtensteiner or Swiss citizens, complicating the immigration process for most. Nonetheless, it is noteworthy that an estimated 50-60 Indians are employed in the country, predominantly residing in neighboring Austria or Switzerland where residential requirements are less stringent. This cross-border presence illustrates the interconnectedness of communities and the economic contributions that Indians make to the region, showcasing the importance of fostering bilateral relations between India and Liechtenstein.