Business without borders

Navigating the Italy-India Corridor among strategy and financial opportunities

by Sante Maiolica

Why does India represent a crucial frontier for Italian businesses today? And what real impact will the new FTA have?

India is not only just a promise anymore, but a reality worth 3.9 trillion Dollars, which grows at 7.2% per year, thus confirming itself as the largest consumer market in the world. The real "game changer" is the new Free Trade Agreement (FTA) between the EU and India, which marks a structural paradigm shift in trade relations. This is an unprecedented operating turn-around: for key industries, such as automotive and machineries, customs duties, which can currently reach prohibitive peaks of 110%, are expected to drastically decrease up to 10% or even to zero for almost all tariff plans. Sectors such as chemical, luxury, and wine will also benefit from significant reductions; wine, for example, will see duties reduced from 150% to 30%. For an Italian business, this means not only a huge increase in price competitivity, but also a simplified access to more resilient global supply chains and the protection of key geographical indications for Italian agrifood exports. Ignoring this acceleration today means denying the opportunity to play a leading role in reshaping global manufacturing and services in the coming years.

Reducing customs duties offers an evident advantage, but how does the new FTA radically change the competitive strategy of an Italian business compared to international competitors?

The reduction in customs duties is only the tip of the iceberg. The real competitive advantage is the stability and certainty of the right guaranteed by the FTA, which allows Italian businesses to plan long-term investment in India at a reduced risk. Until recently, the high customs duties forced many businesses to adopt a “passive export” model, making Italian products too expensive or niche products. Now, thanks to reduced duties for machinery and components, a business can turn its presence from a mere external supplier into an integrated partner in the Indian industrial system. This allows them to compete on equal terms with local players and to outperform the competition of those countries which cannot yet benefit from preferential agreements with India. Moreover, the agreement favours the creation of local logistic and production hubs, thus optimizing the supply chain and reducing delivery terms. In such a context, our role consists in helping businesses to reposition their brand and offer, leveraging the cost differential deriving from the FTA, not only to increase margins, but also to gain a dominant market share in high-growth sectors. 

How does the strategic partnership with SIMEST integrate in this path and what financial instruments are concretely available to businesses?

Strategy without financial supports risks remaining on paper. Our partnership with SIMEST, part of Cassa Depositi e Prestiti Group, is the financial pillar that turns the ambitions of Italian businesses into reality. SIMEST offers a range of instruments that cover the entire spectrum of expansion: from subsidised loans for internationalisation — which support digital and sustainable growth as well as the development of skills — up to "Export Credit" instruments to reduce financial costs of exports. An extraordinarily valuable opportunity is then represented by "Equity Loans", where SIMEST can join the share capital of foreign companies or subsidiaries with an up to 49% share, acting as a long-term institutional partner. This not only provides the capital needed for acquisitions (cross-border M&A) or for the establishment of new plants but also ensures a "light governance" and a financial stability which reassures local partners. Through the Venture Capital fund, SIMEST also supports start-ups and innovative SMEs in their global expansion process. The synergy between Grant Thornton technical advisory and SIMEST financial backbone creates a complete ecosystem where businesses can find an answer to any need.

Which are the industries that should act first and what are the immediate practical implications for those businesses that decide to undertake this path?

The time to act is now, especially for high-impact industries identified in the 2025-2029 Italy-India Strategic Action Plan. Businesses operating in instrumental mechanics, automotive, and industry 4.0 sectors take absolute priority: the Indian transition to smart factory and industrial modernization require technologies in which Italy is a leader. The chemical and pharmaceutical industries, as well, will see their customs duties reduced from 22% to 0%, paving the way for manufacturers of specialty chemicals and medical equipment. In practice, those businesses deciding to start need to begin with a "Market Readiness Assessment" to track product compatibility and regulatory barriers. Then, it is crucial to structure the correct entry model: a subsidiary, a representative office or a joint venture? Each option has implications on transfer pricing and currency compliance, which need to be planned in advance. Lastly, sustainability cannot be forgotten: with the introduction of regulations such as the CBAM, carbon reporting and the alignment of supply chains with ESG criteria are becoming essential operational requirements for maintaining market access.

In such a complex regulatory context, what is the added value of a coordinated approach through the Grant Thornton "Italy-India Corridor"?

The complexity of the FTA agreement lies not only in the tariff rates, but also in the strict technical rules governing its access. The added value of our corridor lies in its ability to transform this complexity into a straightforward implementation process. Grant Thornton operates as a single integrated platform linking Italy and India, breaking down the communication and regulatory barriers that often slow down internationalization processes. Ours is an end-to-end approach: we do not just limit ourselves to theory, but support businesses at every stage of the investment lifecycle. This involves operationally managing the Product-Market Fit analysis, mapping regulatory compliance and designing the ‘Route to Market’, including the selection of local partners or distributors. Thanks to our extensive and multidisciplinary presence in both markets, we provide consultancy services that ensure every expansion strategy is bureaucratically sound and tax-optimised. In short, the Grant Thornton corridor acts as a reliable bridge, allowing companies to focus on their core businesses whilst we manage the complexities of cross-border implementation.