Swedish SMEs eye expanding in India, pin hopes on India-EU FTA

India and Sweden’s bilateral trade stood at $7 billion in 2024

Senior executives of Sweden-based small and medium enterprises (SMEs) are hoping that the free trade agreement (FTA) between India and EU would be hugely beneficial for their sector. They say the FTA would likely lead to a significant growth in exports of the SMEs goods and services to India in the near-term, as well as help the businesses enhance their collaboration with Indian companies.

Moneycontrol spoke to six senior executives of Swedish SMEs, along with the Trade Commissioner of Sweden to India Sofia Hogman, in New Delhi on Monday. The delegation of the leading Swedish SMEs--namely APOCCA Automation, Bubl. Technologies, Bjorklunds Kafferosteri, Moonlighting Industries, Seaflex, and SpinChem—are on a four-day India tour, organised by 'Business Sweden'.

Business Sweden is an organisation jointly owned by the Swedish government and the Swedish business sector. Its primary purpose is to help Swedish companies expand their global sales and to encourage and assist international companies in investing and expanding in European country.

"Large Swedish corporates have been in India for many years, even before the FTA. What we now expect is a huge growth in small and medium businesses, in terms of market access and collaboration with Indian companies," Hogman told Moneycontrol. She expects SMEs in key sectors, namely, industrial automation, chemical process technology, healthcare, entertainment, and renewable energy to expand their footprint in the coming years in India.

"Both Sweden and India have complimentary strengths. India has the growth, talent, digital strength, and AI competence; while Sweden has innovation, sustainability, and advanced manufacturing," Hogman said. For instance, she highlighted, Ericsson has AI-research centres in three key regions--US, India, and Sweden.

At present, around 280 Swedish companies operate in India, and employ about 220,000 Indians. While, only 75 Indian companies operate in Sweden, and employ around 10,000 people, noted Hogman. India and Sweden’s bilateral trade stood at $7 billion in 2024, which can easily be doubled in the near-term, she said.

India primarily exports refined petroleum, motor vehicles, broadcasting equipment, textiles, and chemicals to Sweden, and imports high-value industrial goods and technology.

'Regulations have to ease'

The SME executives largely pointed that the Indian government needs to ease regulations across sectors, "even more", as it is crucial for foreign micro, small, medium enterprises (MSMEs) to expand their operations in the country.

"We work in the renewable energy sector, with the new concept of floating solar. We’re meeting officials of the Ministry of New & Renewable energy this week, to brief them about our work, and discuss regulatory issues," Lars Brandt, CEO, Seaflex.

Typically, solar projects face difficulties in obtaining the necessary permits and clearances from various government departments at the central, state, and local levels, which can be a lengthy and time-consuming process. This often leads to significant project delays and cost overruns, says the industry.

"We attach and monitor the floating solar structures. Because of the FTA, our customers in India expect that the costs (of installation) can go down. This can lead to faster growth in renewable energy projects," said Brandt.

Floating solar is a method of generating solar power by installing solar panels on a structure that floats on a body of water. These installations are typically placed on artificial or calm bodies of water like reservoirs, lakes, irrigation canals, and flooded mine pits.

India currently has five major operational floating solar plants – with a total capacity of close to 1,000 MW. These are in Madhya Pradesh, Telangana, Kerala, Andhra Pradesh and Uttar Pradesh. The central government has allowed 100% FDI under the automatic route in the renewable energy sector.

However, Rajeev Rathore, CEO of Bubl. Technologies said that in the past few years, healthcare sector has seen a drastic decline in regulatory hurdles, which has helped many new entrants scale their operations.

Two senior executives of APOCCA Automation, an industrial automation company working on digitizing and electrifying ports, said they face difficulties with ease of doing business. "We need to come in contact with the ports, but that is often not so easy for a small company just to call the port authority. It’s a tedious process," said APOCCA’s MD Alexander Andersson.

'Collaboration necessary'

Peter Farnebo of Moonlighting Industries, which builds technology for entertainment sector, said that that the collaboration between Indian and Sweden companies in films would enhance the popularity of Indian cinema in the European Country further.

Moonlighting Industries builds AI assistant to track eyeballs of actors, and is working with the production team of upcoming movie 'Ramayana'. "Bollywood aims for best technology from all over the world. Business Sweden’s initiative helps us build connections with Indian stakeholders, and understand the market," noted Farnebo.

Bjorklunds Kafferosteri—a Swedish coffee roastery—is eyeing to now directly approach Indian farmers, and source coffee. "At particular, we do it through an agent in Northern Europe. But I wish to do it directly, which would also increase the income of Indian farmers," said the roaster’s Founder Johan Bjorklund.

Emil Bystrom of SpinChem, said that India has seen a "huge change" in R&D investments since 2017. "Indian companies, instead of just trying to make pharma products cheaper, are now looking into different technologies to make it more sustainable and advanced," said Bystrom.

"That's a huge difference now. We have been selling small devices for lab scale trials and development for seven years. And last week we got the first big order. So, it's getting there. Every company now I meet, they have like 500 or 2000 persons working only with R&D. And that didn't exist before," added Bystrom.

The executives said that their visit to India, facilitated by Business Sweden, aimed at helping Swedish SMEs understand the regulatory framework of India, the government policy, and the Indian market. "Our (Swedish) Minister of Trade has mentioned that SMEs need to start looking more into Asia and specifically India. Thus, it’s important to understand all the aspects (for the SMEs) before entering the market," said Rupa Thakrar Bagoon, Market Manager (Bengaluru), Business Sweden.