As Europe confronts war on its eastern flank, instability in the Middle East, changing relations with the United States and a more complicated economic relationship with China, India is acquiring greater significance in the continent’s economic and strategic calculations.
Austria, a highly industrialised, export-oriented economy at the heart of Europe, sees considerable room to deepen its engagement with India. The India-EU Free Trade Agreement could provide the economic architecture for this expansion, but its success will ultimately depend on implementation, reduction of non-tariff barriers and the ability of companies on both sides to translate political momentum into trade and investment.
I recently met His Excellency Dr. Robert Zischg, Ambassador of Austria to India, at the Austrian Embassy in New Delhi for a conversation that ranged from the FTA and Make in India to the wars in Ukraine and the Middle East, nuclear proliferation, education and skilled mobility.
For Ambassador Zischg, the economic opportunity presented by India is becoming difficult for European businesses to overlook. “When we look at where growth can come from, India clearly stands out,” he told me.
The India-EU FTA, concluded after nearly two decades of negotiations, could substantially alter the commercial relationship. Tariff reductions will provide an immediate advantage in several sectors, but Zischg believes the larger gains could come from tackling regulatory obstacles.
“The more important thing is that non-tariff barriers should be abolished,” he said, arguing that reducing red tape could facilitate greater trade and investment in both directions.
For Austria, the opportunities range from machinery and specialised engineering to infrastructure, automobiles, wine and spirits. Austrian companies occupy leading positions in several specialised manufacturing niches, while India offers something European businesses increasingly need: scale.
Wine provides an interesting illustration. Import duties that have historically made European wines expensive in India are expected to decline substantially under the FTA. Austrian winemakers who have visited India are already looking at the country as a potentially significant market.
Machinery and equipment, however, remain at the core of the commercial relationship. They constitute a substantial share of Austrian exports to India, while Austrian expertise in railways, roads, tolling systems and advanced engineering provides further possibilities.
From exporting to manufacturing
The larger opportunity may eventually lie in manufacturing. More than 160 Austrian companies have subsidiaries in India, according to Zischg, and around 65 are already manufacturing in the country. He expects that number to increase as companies develop larger markets for their products.
“Given the size of the market, I think more and more Austrian companies will also be inclined to manufacture here,” he said. The process generally begins with exports. Once volumes become sufficiently large and companies develop confidence in the market, local manufacturing becomes commercially attractive. Geographic distance further strengthens the case for producing within India.
That trajectory fits naturally with Make in India, but Zischg repeatedly emphasised one requirement: ease of doing business. This is particularly important because much of Austrian industry consists of small and medium-sized enterprises. Unlike multinational corporations, SMEs have limited resources to navigate complicated regulatory environments.
“If it is easy, they will do business and they will invest. If it is far too complicated, they cannot afford it,” he said.
The bilateral Fast-Track Mechanism for investment facilitation, launched during Chancellor Christian Stocker’s India visit, could therefore assume considerable importance. Austrian companies can raise regulatory and administrative concerns through the Embassy, which can forward them to the designated Indian authorities for coordination with relevant ministries.
For businesses, Zischg observed, agreements matter only when their benefits become visible on the ground.
A target to double exports
Zischg has set an ambitious benchmark for his tenure: substantially increase Austria’s economic engagement with India. “Next five years, I think it is realistic to double our exports. And at least double our investments,” he said.
He believes Austrian exports could rise from roughly €1.5 billion to €3 billion. Given India’s scale, he suggested that even greater expansion is conceivable over the longer term. The Ambassador places this ambition within a larger global realignment.
Austria depends heavily on international trade. Yet some of its traditional external markets are becoming more uncertain. Economic relations with Russia have been severely affected by the Ukraine war. China presents its own challenges, while the outlook for trade with the United States has become harder to predict.
India, by contrast, combines scale with economic growth and political stability. Zischg also sees the European Union as offering India something valuable in return: reliability. European institutions and regulations can sometimes appear cumbersome, but they provide predictability for long-term investment. The relationship therefore extends beyond commerce.
“India is not only now the largest country in the world, population-wise, it is also the largest democracy,” he said. In his assessment, India is also “an anchor of stability” in a volatile geopolitical environment.
Ukraine and the defence of international law
The conversation inevitably turned to the war in Ukraine, an issue that Zischg views not simply as a European conflict but as a test of the international system created after 1945. For Austria, geography makes the war particularly immediate. “The Ukrainian border is a five-hours drive east of Vienna,” he noted.
Austria’s position is shaped by its own history as a smaller European country and by its commitment to the UN Charter. Zischg argued that allowing borders to be altered through military force would have consequences far beyond Europe. “We do not want to see history repeat itself,” he said.
He acknowledged that wars ultimately end through negotiations, but argued that any settlement must be acceptable to Ukraine rather than imposed upon it. The larger principle, he said, is that territorial disputes must be addressed through peaceful negotiations rather than invasion.
“If both sides agreed to a certain solution, then this is the best outcome,” he said.
Middle East, Iran and the nuclear question
The Middle East presents a different but equally complex challenge. Conflict involving Iran, Israel and other actors has implications for shipping, energy prices and international supply chains, particularly around the Strait of Hormuz.
Yet Zischg believes the nuclear question is even more consequential.
Austria has traditionally been a strong advocate of nuclear non-proliferation and supported the 2015 Joint Comprehensive Plan of Action. Zischg argued that any durable settlement involving Iran must include credible international oversight of its nuclear programme.
The danger is not confined to Iran itself. An Iranian nuclear weapon could encourage other regional powers to develop their own capabilities, weakening decades of international non-proliferation efforts.
Despite the difficulty of negotiations, he cautioned against abandoning diplomacy. “Neighbours will stay neighbours,” he said. “Sooner or later, you again sit at a negotiating table, talk about the issues, and not fight wars against each other.”
Beyond trade: people and perceptions
Zischg’s vision for India-Austria relations also extends to education, tourism, films and skilled mobility. He wants more Indian students to consider Austrian universities, particularly technical institutions in Vienna, Graz and Leoben. Austria also faces shortages of skilled workers in areas such as healthcare and elderly care, creating possibilities for carefully managed mobility from India.
Tourism can grow substantially in both directions. Indian visitor numbers to Austria have been rising, while Zischg believes India needs to do more to change outdated perceptions among Europeans. The larger challenge, particularly for a relatively small country like Austria, is comprehending India’s extraordinary scale.
For companies, investors and tourists alike, India offers so many possibilities that the first question is often where to begin.
But that complexity is increasingly being viewed as an opportunity rather than an obstacle. With the FTA creating a new framework for India-Europe commerce and geopolitical uncertainty forcing countries to diversify their partnerships, Vienna and New Delhi have strong reasons to look more closely at each other.
For Austria, Zischg’s objective is straightforward: more trade, more investment, more manufacturing and deeper connections between people.
And behind that agenda lies a larger European calculation—that in a world where many established economic relationships are becoming less predictable, India could increasingly become one of the places where the next phase of growth is found.
