Insights | 18 December 2023

Madhumita Hazarika Bhagat , High Commissioner of India to the Republic of Cyprus

The success of Indian start-ups and the growing start-up ecosystem in Cyprus present a significant opportunity for cross-border collaboration and expansion. Prospects for partnerships in areas such as IT, software development, and fintech are significant.

How would you describe the current bilateral relations between India and Cyprus? 

India and the Republic of Cyprus have enjoyed a deep and enduring friendship since establishing diplomatic ties on February 10, 1962. This relationship has been influenced by a variety of factors, including historical events and cultural interactions. The bond between the two nations was further strengthened through a close association with Archbishop Makarios III, the first President of the Republic of Cyprus. This relationship set the stage for the robust ties that exist today. India has been a steadfast supporter of Cyprus in all international affairs, backing its independence struggle and consistently advocating for a resolution to the Cyprus issue based on United Nations Security Council resolutions, international law, and EU acquis.

Despite the geographical distance, India and Cyprus have nurtured cultural exchanges and personal connections. The Indian community in Cyprus, while relatively small, has facilitated cultural exchange and business links between the two countries. Indian expats in Cyprus have also contributed to strengthening the ties between the two nations. Economic relations between India and Cyprus have developed, with both nations seeking to enhance trade and investment links.

In the past decade, both India and Cyprus have underscored the significance of sustainability, innovation, and technology in their respective strategic visions for the future. This shared dedication to addressing the modern world’s challenges and opportunities highlights the dynamic nature of the relationship between the two countries.

What significant key projects are there between the two countries at the moment, and what kind of projects or cooperation would you like to see developed in the future? 

India and Cyprus have maintained robust economic relations, with trade and investment being the cornerstones of our bilateral ties. The relationship is characterised by mutual respect, shared values, and a commitment to promoting economic growth and development.

India re-classified Cyprus in Category 1 of Foreign Portfolio Investors (FPIs) in India, it is the third non-FATF country to be given this exception. The classification offers facilitation of Cyprus investment funds for investors and asset managers in the Indian markets. In December 2021, Invest India and Invest Cyprus signed an MoU with the intention of enhancing their mutual investment activities and promoting overall business cooperation. 

Today, the Republic of Cyprus is the tenth largest FDI investor in India with accumulated investment of almost US$12 billion during the last 20 years. The COVID19 pandemic has highlighted the importance of stronger economic cooperation, in the health and pharmaceutical sectors. Pharmaceuticals, iron and steel ceramic products, electrical machinery are some of the major items of export from India to Cyprus. Bilateral trade between the two countries has steadily increased over recent years and stood at US$198.05 million for April 2022-March 2023. Looking ahead, the prospects for enhancing economic ties between India and Cyprus have good potential in tourism, technology including fintech and AI, education and trade.

Cyprus has been a convenient EU base for foreign companies for decades, in your view what factors have contributed to the appeal of Cyprus as a business jurisdiction?

The Republic of Cyprus has been a popular business jurisdiction for several reasons. As a member of the European Union, Cyprus adheres to EU regulations and directives. This provides businesses with certainty and stability. Cyprus ranks high on Ease of Doing Business and Innovation indices in Europe providing a conducive business climate for companies to operate in. Cyprus has a Common Law legal system based on English law, which is widely recognised, stable and offers predictability for businesses. In addition, Cyprus has an advanced telecommunications network and infrastructure, which is crucial for modern businesses. These factors have contributed to making Cyprus an attractive jurisdiction.

What kind of new opportunities does Cyprus offer Indian businesses or investors at the moment, and vice versa? 

Both India and Cyprus have acknowledged the crucial role of technology and innovation in propelling economic progress. India today has the third-largest start-up ecosystem in the world and is predicted to expand rapidly. Indian start-ups have been making significant strides in recent years, with many achieving remarkable success. Several start-ups are now household names in India. More importantly, Indian start-ups are providing innovative solutions not just for Indian markets but for global consumers. This was evident in the recent participation of Indian start-ups at the Reflect Festival in Limassol.  

Cyprus is strategically located at the crossroads between Europe, Africa, and Asia and can function as an effective first port of call for Indian start-ups looking to expand into the EU market. In addition, the success of Indian start-ups and the growing start-up ecosystem in Cyprus and Europe present a significant opportunity for cross-border cooperation and expansion. Also, the flourishing tech industry in India, coupled with the emerging tech sector in Cyprus, can lay a robust groundwork for tech-centric collaborations. Opportunities for partnerships in areas such as IT, software development, and fintech can be investigated.

As the global focus shifts towards eco-friendly energy solutions, there is potential for India and Cyprus to collaborate on renewable energy initiatives, such as solar and wind power. Given Cyprus’ geographical advantage for solar energy generation, it could be a valuable partner in India’s transition to cleaner energy sources.

India’s burgeoning pharmaceutical sector and Cyprus’s established healthcare industry present another avenue for collaboration. Joint efforts in pharmaceutical research, development, and distribution could lead to outcomes that are beneficial for both countries. Enhancing connections in education and research can foster human capital development and knowledge exchange. The establishment of joint academic programs and research initiatives can further solidify our economic relations.

India has a strong innovation and technology ecosystem, how could this expertise be applied in Cyprus?

India's strong innovation and technology ecosystem could be applied in Cyprus in several ways. Indian tech start-ups have shown significant growth and have attracted global investors. This expertise could be shared with Cyprus's emerging start-up ecosystem to foster innovation and entrepreneurship. India has made substantial investments in research and development (R&D), which has led to advancements in various sectors including agriculture, manufacturing, automation and biotechnology. Cyprus too has a vibrant R&D ecosystem. Exchange of best practices and projects could be encouraged to find synergies and boost the outcomes of these research capabilities. India has a large pool of skilled professionals in the IT sector. Cyprus too attracts some of the best talent in technology in the region. Collaborative programmes could be established to exchange knowledge and skills between the workforce in India and Cyprus. India's fintech sector has seen rapid growth. Partnerships could be explored in this area that could add value to India’s and Cyprus’ fintech ecosystems in areas of e-governance, digital payments, and online services. India has been investing in renewable energy projects. Similar initiatives could be undertaken in Cyprus, leveraging its geographical advantage for solar energy generation. These are just a few examples of how India's innovation and technology expertise could be applied in Cyprus. The actual possibilities are vast and could lead to mutually beneficial outcomes. 

How do you see the relationship of the two countries developing in the future?

India and Cyprus have a robust framework for bilateral investment. The two countries have signed a Double Taxation Avoidance Agreement (DTAA), which has been in force since 1994. This agreement was further revised in 2016, putting in place global best practices and minimum standards. This agreement has facilitated a significant amount of Foreign Direct Investment (FDI) from Cyprus to India. Looking ahead, there are several areas where we can further strengthen our investment ties. These include sectors such as information technology, pharmaceuticals, renewable energy, tourism, and shipping, where both countries have significant capabilities. 

We are working on facilitating greater interaction between the business communities of both countries through business forums and trade fairs. Such interactions would help in identifying new areas of cooperation and investment. In September 2023, eight Indian start-ups, selected by Startup India, our national start-up incubator ecosystem, participated in the Reflect Festival in Cyprus. India was the partner country for the event for the first time and the response has been encouraging. Indian start-ups are not just developing solutions for India, they are developing solutions for the world. 

While we have taken great strides in enhancing our investment relations, but there remains significant potential for further growth. The existing policies and past accomplishments between India and Cyprus provide a robust basis for future collaboration. By concentrating on areas such as technology, financial services, tourism, and maritime commerce, we can further amplify the investment opportunities between our two nations. The High Commission of India to Cyprus is dedicated to fostering and cultivating these prospects to stimulate economic development and fortify the bilateral relationship.

Cooperation Partners
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