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Economic and commercial relations between India and Hungary

Economic  co-operation between India and Hungary has a long history. Co-operation  in this field was institutionalized in 1949 with the signing of a Rupee  Trade Agreement which operated through the negotiation of annual  protocols which fixed the products to be traded and the amounts thereof,  with the trade being canalised through government agencies. This trade  pattern continued till 1990 with the only modification being that in  1979 hard currency trade terms were introduced to replace the rupee  payment / barter system that had been in operation till then. The  inter-governmental Joint Commission was established in 1973.

Before  the change over in Hungary in 1990, India was Hungary’s major partner in  Asia both in trade and economic collaboration, even though this covered  only a small proportion of Hungary’s international economic  interaction. Hungary provided a useful first European market for several  non-traditional Indian products including Maruti cars and Mopeds.  Bilateral trade during the 1980’s remained above USD 100 million and in  some years even touched $ 200 million. The major items of export from  India before 1990 were tea, tobacco, pepper and other spices, de-oiled  cakes, finished leather and shoe uppers, iron ore and pellets, cotton  and jute goods, engineering goods, Maruti vehicles, chemicals and  chemical products. Imports from Hungary included steel and steel  products, chemicals, machine tools, pulses, peas, newsprint and  engineering goods, especially for railways and power projects. Over 60  collaborations had also been established in India by Hungarian  companies.

Sweeping reforms were undertaken at the beginning of the  1990’s in both India and Hungary with a view to integration with the  world economy which changed the rules of the game in both countries but  more dramatically in Hungary. As far as India was concerned, the  economic changes in Hungary have meant that the old commercial links  have virtually dissolved and new trading relations to replace them have  been slow to emerge due to various reasons. While deregulation and  liberalisation of the economies have thrown up fresh opportunities in  both countries for enhanced and meaningful commercial and economic  co-operation, there has not yet been any significant utilisation of  these opportunities. However, in the last few years bilateral trade has  once again increased.

Indo-Hungarian trade , though still much below the potential, has been increasing steadily.


I. Trade and other agreements: A number of agreements provide the institutional framework for economic cooperation with Hungary:

  • Double Taxation Avoidance Agreement (DTAC) (signed in November, 2003)
  • Bilateral Investment Protection and Promotion Agreement (BIPA) (Nov, 2003)
  • MoU on IT Cooperation (Nov.2003)
  • Agreement on Defence Cooperation (Nov.2003)
  • Economic Cooperation Agreement (June 2005)
  • Cultural Exchange Programme (Oct 2006)
  • Agreement on the cooperation in the field of Agriculture (Jan 2008)
  • Agreement in the field of Science and Technology (Jan 2008)
  • Health Cooperation Agreement (Jan 2008)
  • Agreement between ONGC and MOL for joint exploration (Jan 2008)
  • Establishment of a Strategic Fund of Euro 2 million (Jan 2008)
  • MoU on Social Security Agreement (Feb 2010)
  • Agreement on Arbitration between FICCI and HCCI (Feb 2010)
  • MoU on Traditional Systems of Medicine, Ministry of Health India, Ministry of Human Resources Hungary (Oct 2013)
  • MoU on Cooperation in the field of Water Management (Oct 2016)
  • MoU between the Indian Council of World Affairs and Institute of Foreign Affairs and Trade of Hungary (Oct 2016)
  • MoU between FICCI and HCCI to develop and diversify economic and commercial cooperation (Nov 2017)
  • MoU on Enhancing bilateral Investment Relations between Invest India and HIPA (Mar 2018), renewed on (May 2022)
  • MoU between CEUCCI and HCCI - (Jun 2018)
  • MoU between WAPCOS and Budapest Waterworks (Sept 2019)
  • MoU on Investment Promotion between HIPA and FICCI  (May 2022)    

II. Joint Committee on Economic Cooperation (JCEC): The Indo-Hungary Joint Committee on Economic Cooperation provides the institutional framework for intergovernmental discussions on economic cooperation. The 13th session of the Indo-Hungarian Joint Commission for Economic Scientific and Technical Cooperation - the second meeting following the new agreement signed with Hungary in 2005 after it became a member of the European Union - was held in February 2010 in Budapest. The JCEC identified various areas such as IT, pharmaceuticals, auto components, Ayurveda, tourism, energy, engineering & food processing for intensifying bilateral trade and economic cooperation. The third meeting of JCEC was held in New Delhi in October 2013. The meeting identified several areas for focused attention. The fourth session of the Joint Committee on Economic Cooperation took place in Budapest, Hungary, in June, 2016. New areas for focused attention were identified. The Hungarian side announced setting up of two offices of Hungarian National Trading House (since closed) and creation of the post of Attache, Science & Technology, in the Hungarian Embassy in New Delhi. The Fifth Session of the Hungarian-Indian Joint Commission on Economic Co-operation, was held in March, 2018 in New Delhi. The highlighted areas of cooperation at the Joint Committee meeting included trade and investment, agriculture and the food industry, aviation, the space industry, energy, water, science and technology, information and communications technology, transport, education and culture, and healthcare and the health industry, in addition to which the parties also review opportunities for cooperation within the field of tourism. The 6th JCEC was held on 17-18 October 2022 in Budapest. The sides discussed areas of trade cooperation, policy reforms, business environment, ease of doing business, cooperation in various fields like agriculture, finances, science & technology etc. Both sides agreed on the need to further deepen cooperation in areas of mutual interest.

III. Joint Business Council: A Joint Business Council of Indian and Hungarian companies was set up in 1979 under an agreement between FICCI and Hungarian Chamber of Commerce to promote direct contacts between business delegations. It met in Budapest in February 2010 on the sidelines of the JCEC. During the meeting, the FICCI and Hungarian Chamber signed an MOU on Arbitration and Conciliation Tribunal, which would enable both countries to settle commercial disputes. Since the meeting of JBC in February 2010, there have been regular exchanges of the Indian and Hungarian business delegations to explore business opportunities. A meeting of the Joint Business Council was held on the sidelines of the JCEC meeting in Budapest, Hungary, on June 2-3, 2016. FICCI brought an 18-member Indian business delegation for the Joint Business Forum.  Over 100 B-2-B meetings were held between the Indian companies and the Hungarian companies which participated in the Joint Business Forum. The 4th India – Europe 29 Business Forum, organised by FICCI, in coordination with MEA, New Delhi during March 5-6, 2018, discussed steps to broadbase bilateral economic and business partnerships. The speakers addressing the conference titled “India and Europe 29: Synergising Economic Vision For Expanded Economic Relations” spoke about partnership opportunities in the realms of Industry 4.0, smart city development, implementation of healthcare IT, and skills development. Participation from Hungary involved the Hungarian National Trading House (since closed), the Hungarian Embassy in New Delhi, at which Hungarian enterprises held B2B discussions within the fields of info-communications technologies, agriculture and food industry, and chemical industry.