Investment and Migration Linkages between India and the EU

India has had long-standing investment ties with various EU countries. Many EU countries are significant investors in India and several EU-based MNCs have business operations in India. Of late, Indian investments in the EU have also gained importance. Leading Indian IT companies have established local presence through branches and subsidiaries in several EU countries. Alongside the growing business relations between India and the EU, there is increased short-term and circular mobility of persons between India and the EU, in large part to support business operations in each other’s markets. This paper examines the linkages between investment and associated labour mobility between India and the EU. Following the introduction, Section 2 provides a brief literature review of labour mobility and investment relations and their effects on developed and developing nations. Section 3 offers an overview of growing investment relations between India and the EU and accompanying labour flows between India and the EU to underscore the need for studying this linkage. Section 4 discusses immigration and labour market regulations which have a bearing on investment operations and vice versa, for selected EU countries in order to highlight the extent to which regulations on one impinge on the other. It also examines the Schengen treaty and the implications of recent developments such as the EU Blue Card and totalisation agreements (signed or under negotiation) between India and some EU countries for investment-related labour mobility from India to the EU. Section 5 provides the findings from in-depth interviews conducted with senior industry executives from leading EU as well as Indian firms to understand the nature of the labour flows which accompany investment operations. It also examines the extent to which investment and labour flows in the India-EU context are complementary and how barriers to labour mobility may affect investment operations in each other’s market. The discussion in this section indicates that there is considerable short-term mobility of Indian business visitors, intracorporate transferees, and professionals working from Indian subsidiaries of European firms to the EU countries. There is also movement of skilled Indians working in Indian firms in India, to their EU-based subsidiaries. In both cases, movement from India to the EU is mainly driven by the need to address skill shortages in the EU countries and to facilitate the migration and offshoring of client processes to India. The evidence indicates that investment presence in the EU facilitates mobility from India to the EU, although there are considerable differences in labour market and investment regulations across the different EU member countries. Section 6 examines the nature of movement by EU nationals to Indian subsidiaries of EU MNCs and the associated Indian immigration policies affecting such movement. The discussion indicates that such movement is very limited at present, mostly pertaining to business meetings and training sessions and the problems encountered mostly pertain to issues of transparency, poor institutional mechanisms and delays. Section 7 concludes by noting the main issues concerning labour mobility that would need to be addressed to promote India-EU investment relations.